By Jesse Marx
By Chris Parker
By Jake Rossen
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By Michelle LeBow
By Alleen Brown
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By CP Staff
Yet it doesn't seem to have been enough. As if to underscore the failure of previous agreements with the phone company, the commerce department and the Attorney General's Office on April 14 announced a new deal aimed at making sure customer service will improve if U S West and Qwest are allowed to merge. (The PUC was slated to consider how the deal will affect its review of the merger as City Pages went to press, on April 25.)
The settlement calls for the merged company to make at least $170 million in new investments in Minnesota over the next four years. U S West is supposed to hire additional customer-service representatives, buy new trucks and equipment, and add service and repair technicians. It's also expected to expand its DSL offerings to 13 cities in outstate Minnesota, and to engage in a massive grooming of its infrastructure. Finally, the deal provides for substantial fines should U S West fail to comply with the service standards set forth in the AFOR--anywhere between $15 million and $50 million per year.
"The penalties the company has agreed to in this settlement will make compliance with those standards critical, front-and-center for the company," says Assistant Attorney General Dan Lipschultz. By 2003, when the AFOR runs out (the settlement agreement will last one year longer), "we expect things to look very different than they do today." But when can consumers expect to see a real difference? "That," Lipschultz acknowledges, "is very hard to say."
The way analyst Thomas Friedberg sees it, the back-patting about a new era for U S West customers may be a bit premature. For starters, he contends, the settlement means nothing until the PUC approves it. "You had no parties who have jurisdiction in this matter agree to anything," Friedberg says. "It's completely meaningless until the fat lady sings."
And even if the PUC ratifies the deal, it's possible that U S West/Qwest could simply flout the new requirements, says Robert Johnson, executive director of Consumers' Voice, an Indianapolis-based advocacy group that focuses on local phone competition. Even the maximum fine of $50 million isn't much for a company that in 1999 had revenues of almost $13.2 billion.
With its higher penalties and incentives, Johnson says, the new settlement is "certainly the right direction." But, he cautions: "I see no reason that just because a company is in the process of a merger it has become a born-again consumer-priority entity. [U S West] is a company that doesn't seem to want to practice customer service in any meaningful way. Whether these penalties are enough to get the attention of a merged company when they clearly didn't before is something I can't judge."
In the long term, Johnson argues, the solution to the dilemma is increased competition for local phone customers, "so the company has no choice but to compete both on price and service. Clearly we're a lot farther away from that than consumers would like to see." (While the state's agreement with U S West and Qwest calls for penalties if the companies don't let competitors use their wires and switches, those competitors usually target small-business customers, not residential customers.)
"The marketplace will ultimately be the test," Johnson surmises. "That will be heard a lot more than penalties."
If things do change at U S West, it will be too late for Jeanne Barker-Nunn. Two months into her telephone saga, she says, the company finally acknowledged that what the customer-service rep had promised her--a package under which she would retain all the features of her phone system, and gain the advantages of DSL--was technically impossible. Instead, she got separate home, business, and fax phone lines; exactly what she'd had when the ordeal began.
Barker-Nunn also asked U S West to reimburse her for almost $18,000, the amount of money she calculated she had lost because her business was all but closed down by the phone problems. She had just completed a major advertising blitz seeking more university clients. She says she'll never know how many potential customers gave up on her because of the phone quagmire.
Five weeks after she sent in her claim, she received a terse response: The phone company offered her six months of free phone service. She contacted attorneys, who told her that the size of her claim was too small to make a lawsuit worthwhile. U S West has since offered her a settlement of $925.10, but Barker-Nunn has not yet accepted the money and says she may still bring a complaint in small-claims court.
"I had worked so hard to build this business from scratch," Barker-Nunn muses now. "It was like a baby. To have U S West come in and virtually destroy it in front of our face..." Her voice trails off. "I was so powerless. If U S West as a utility can screw you over any way they want and be protected by law, they should not be promoting themselves as a consumer company."
Friedberg, who once worked for U S West as a financial analysis director, would agree. There is potential, he says, for the company to turn itself around--but only if, after the merger, the new leadership realizes that consumers do matter. "[Qwest chairman] Nacchio and his team recognize that the way they can win big points is in overcoming U S West's 16 years of callous contempt for customers," Friedberg suggests.