2. Background
2.1. Decision Implementing Service Quality Measures
Decision (D.) 09-07-019 adopted GO 133-C which revised the service quality rules, measures and standards established under GO 133-B.
The Commission adopted five minimum sets of service quality measures for installation, maintenance and operator answer time for local exchange telephone service. The goal of these service quality measures was to ensure that telecommunications carriers provide relevant information to the Commission so that it may adequately protect California customers and the public interest. All of the GO 133-C service quality measures apply to rural telephone companies regulated under rate-of-return regulations commonly known as General Rate Case Incumbent Local Exchange Carriers (GRC ILECs). However, only three of the measures -- Customer Trouble Reports, Out-of-Service Report and Answer Time -- are applicable to ILECs and Competitive Local Exchange Carriers (CLECs) with 5000 or more customers regulated under the Uniform Regulatory Framework (URF).2 Resellers and Wireless carriers are not subject to GO 133-C reporting. The current GO 133-C service quality measures are the following:
1. Installation Intervals - This measures the amount of time to install basic telephone service. The minimum standard is five (5) business days.
2. Installation Commitments - This measures the number of service installation commitments each carrier meets and excludes those instances where customer actions prevent the carrier from meeting the installation commitment. The minimum standard is 95% of the time.
3. Customer Trouble Report - This measures the number of all trouble reports each carrier receives from customers in relation to lines or equipment. Carriers should have no more than 6 trouble reports per 100 lines for reporting units with 3,000 or more lines, no more than 8 reports per 100 lines for units with 1,001-2,999 lines, and no more than 10 reports per hundred lines for units with 1,000 or less lines. The carrier collects the data monthly and reports it to the Commission quarterly.
4. Out-of-Service Report - This measure reflects how long a customer may have to wait to have service repaired. The minimum standard is 90% of a carrier's out-of-service repair requests should be completed within 24 hours.
5. Answer Time - This measure reflects how quickly a customer can expect to speak with a live agent when calling a carrier's business office regarding an issue. The minimum standard is 80% of calls should reach a live agent in 60 seconds or less (with a menu option to reach a live agent).
In addition, carriers are required to provide the Commission with the underlying raw data for all the reporting measures except Answer Times. All reports and raw data are to be compiled monthly and reported quarterly, and are due 45 days after the end of the quarter, except for Answer Times which are compiled quarterly and reported annually on February 15th of the following year.
2.2. March 2011 Staff Service Quality Report
In March 2011, CD prepared a report pursuant to GO 133-C § 7 regarding the quality of telephone service provided by wireline telephone companies in 2010. (Attachment A to this Order). The report, Telephone Carrier Service Quality for the Year 2010, was distributed to the Commissioners and the California Legislature and is attached to this Order. The findings and conclusions in the report were based on the GO 133-C service quality measures submitted by a total of 27 telephone carriers; URF ILECs (4), URF CLECs (8), and the GRC ILECs (15). The report also addressed the responses of Pacific Bell Telephone Company dba AT&T California (AT&T) and Verizon California Inc. (Verizon) to the severe winter storms that caused wide-spread service outages in Southern California during the months of December 2010 and January 2011.
1. CD staff's report regarding the carrier reports for GO 133-C Service Quality measures:
a. Installation Intervals - All of the fourteen GRC ILECs that reported for the full year met the standard of installing service in five days or less in each of the twelve months. Two of the four URF ILECs met the standard in each of the six months reported.
b. Installation Commitments - Eleven of the fifteen GRC ILECs met the standard to keep installation appointments 95% of the time for each of the twelve months, and the remaining three companies that reported for all twelve months met the goal in eleven of the twelve months.
c. Customer Trouble Report - All of the twenty-seven carriers met the Customer Trouble Report standard of between 6% and 10% per 100 lines, depending on the size of the reporting company.
d. Out-of-Service Report - CD's report showed that among the URF ILECs, AT&T, Verizon, and Frontier Communications of California (Frontier) did not meet the Out-of-Service (OOS) repair standard for all of the reporting months of 2010. However, SureWest Telephone (SureWest) met the OOS standard for four of the twelve reporting months. With regard to URF CLECs, only three out of eight met the OOS minimum standard for six or more months in 2010. Among the fifteen GRC ILECs, thirteen carriers met the OOS minimum standard for at least nine months or all the reporting months of 2010. In addition, CD compared all of the carrier's first Quarter 2011 OOS results with their first Quarter 2010 OOS results and found compliance levels remained generally the same. None of the URF CLECs met the minimum OOS standard.
e. Answer Time - CD also found substandard results for this measure. SureWest met the goal for three of the four quarters, AT&T and Frontier met it for two quarters, and Verizon did not meet it in any quarter. A majority of the URF CLECs met all the four reporting quarters of 2010. Only six of the GRC ILECs met all four quarters of 2010.
2. CD staff's report regarding AT&T's and Verizon's responses to the service outages caused by the winter storms of December 2010 and January 2011.
In December 2010 and early January 2011, a series of severe rainstorms battered Southern California, resulting in flooding that led to the Governor's declaration of state of emergency in twelve counties in Southern California. These rainstorms caused over 250,000 AT&T and Verizon customers to lose telecommunications service for various periods of time. The outage event attracted State Senator Alex Padilla's attention, and he requested that the Commission obtain additional information regarding the carriers' service restoration efforts. On February 4, 2011, the Senate Energy, Utilities and Commerce Committee chaired by Senator Padilla held a hearing because of the significant impact of the outages on customers.
From Senator Padilla's hearing inquiry, CD noted that, although approximately 50% of the affected customers had service restored within four days, many customers remained without service for ten days, and in some cases for as long as 30 days. CD observed in its March 2011 report that the December 2010 GO 133-C service quality report did not include outage information for the December 2010 rainstorm events in Southern California. This was due to the order's specific exclusion of data compiled during catastrophic events. CD also cited in its report that GO 133-C lacked specificity as to when a state of emergency ended, what information should be included in the raw data to support carriers' reported results, and in what format the raw data should be submitted to allow CD to reproduce carrier results. For example, one carrier provided raw data that included less than one half of the service tickets received for the First Quarter 2010, and in numerous other instances, carriers provided raw data in a PDF or picture format that did not show the formula for the underlying calculations.
In 2010, CD found that AT&T's first and second quarter supporting raw data files were truncated and required several re-runs and resubmissions of the data to provide a full reporting of Out-of-Service repair tickets. CD's staff recommended in its report that the Commission open an OII or OIR to review the service quality standards, and specifically address why some carriers consistently could not or did not meet the Out-of-Service Repair or Answer Time standards in 2010, and to consider whether to adopt new standards, modify current standards and adopt penalty mechanisms.
2.3. Telephone Service Outage Letters to the Commission
The Commission received eight letters from industry parties regarding CD's March 2011 Report.3 All non-carrier commenters suggested that network degradation due to deferred/no maintenance was the cause of extended outages during the storms of December 2010 and January 2011, as well as AT&T and Verizon's inability to meet the OOS repair goal in 2010. Additionally, all commenters except Verizon endorsed the opening of a rulemaking to review carrier service quality performance, while CLECs also stated there are competitive implications for poor service quality given their reliance on ILEC copper facilities.
On May 2, 2011, The Utility Reform Network (TURN) submitted a letter to Commission President Michael Peevey supporting CD's recommendation for a Service Quality OII/OIR. TURN alleged that AT&T had a long history of service outage problems in California, AT&T and Verizon have incentives to invest and maintain equipment in states that have more oversight than California, and inadequate maintenance of wireline equipment contributed to the extended duration of service outages during the storms of occurring in December 2010 and January 2011.
As evidence of AT&T's long history of service quality problems, TURN's letter cited a complaint filed in 2001 by the Office of Ratepayer Advocates, currently known as the Division of Ratepayer Advocates (DRA), which resulted in the Commission instituting a 29.3 hour restoral standard for initial repairs, and a $300,000 penalty for each month that AT&T did not meet the standard. In response, AT&T stated, that under the old OOS standards of 29.3 hours to repair for initial tickets, and 39.4 hours for repeat tickets, it met the standard five out of seven years for initial tickets, and seven of seven years for repeat tickets.
TURN referenced in its letter the testimony given by the Communications Workers of America (CWA) at Senator Padilla's February 4, 2011 hearing as support for its charge that AT&T and Verizon are incentivized to invest and maintain equipment in states with more oversight than California, TURN stated that since penalties were removed from performance in California, AT&T and Verizon have not met the repair time standard in any period
CALTEL agreed with TURN and noted that deteriorating wireline facilities were the root of AT&T and Verizon's inability to meet the 24-hour restoral standard, and cited as examples, two San Francisco fire-houses losing 911 connectivity due to wireline failure.
AT&T countered TURN's claim by stating that it invested $2.1 billion dollars in its wireline network during 2009 and 2010. AT&T also stated that the majority of its customers that lost service during the storms were restored within four days. Verizon stated that they have invested $600 million dollars annually for the last several years into their network and that TURN has no evidence that inadequate maintenance was a factor in outage duration during the storms, and that dissatisfied customers can choose other providers.
TURN, CALTEL and DRA all provided recommendations on how the Commission can improve telephone service quality including:
1. Require telecommunications networks to comply with generally accepted industry performance standards (e.g., Telcordia/Bellcore standards);
2. Engage a consultant to perform engineering and operational audits of any ILECs that has an average below 60% of customer OOS or trouble reports within 24 hours during any 12-month period based on GO 133-C performance standards; and
3. Collect and publish monthly reports detailing whether ILECs have met wholesale performance standards.
4. Levy fines for failure to meet retail service quality standards. CLECs fines should take into consideration inter-dependence on ILEC performance.
5. Investigate AT&T and Verizon's outside plant maintenance and investment practices.
CALTEL additionally argued that since CLECs rely on copper facilities owned by URF ILECs, deteriorating facilities and extended out-of-service repair times negatively impact customer choice by increasing costs of CLECs through compensating customers to restore confidence in their service. If this confidence cannot be restored, it creates an anti-competitive environment by removing CLECs as a viable alternative to the URF ILECs.
2 D.09-07-019 at 54. An URF CLEC with less than 5000 customers and authorized as a Carrier of Last Resort (COLR) is required to report Customer Trouble Report, Out-of-Service Report and Answer Time.
3 The Utility Reform Network (TURN) (5/2/11), California Association of Competitive Telecommunications Companies (CALTEL) (5/6/11), Small Business California (SB-CAL) (5/9/11), Disability Rights Advocates (DisabRA) (5/9/11), Division of Ratepayer Advocates (DRA) (5/10/11), Utility Consumers' Action Network (UCAN) (5/13/11), Verizon California (5/18/11), and AT&T California (5/18/11).
