III. Existing Service Quality Measures and Standards

In response to the Telecommunications Division staff's (staff's) requests for service quality data, carriers submitted information indicating that California's telephone carriers utilize significantly different methods for measuring service quality. Moreover, staff has found that the raw data collected and the methods used to process and report that data have changed significantly from time to time.

Differences between the methods and procedures used by companies to compile and report service quality information, as well as changes to those methods within a given company from year to year raise concerns about the consistency of reported information either between companies or over time for an individual company. These inconsistencies undermine the Commission's ability to compare carriers' service quality information, and diminish the usefulness of this information in assessing levels of service quality generally or changes in service quality over time. Therefore, we propose to establish more uniform procedures for measuring and reporting service quality measures.

We also propose to require carriers to base service quality measurements on comparable raw data, and to inform the Commission when changes occur in business arrangements or processes that affect the composition of the raw data underlying service quality results. This will help ensure that "apples to apples" comparisons are made either between companies or over time for an individual company.

For example, Pacific included billing inquiries in its measurement of BOAT during some periods and excluded billing inquiries during others. On the other hand, Verizon and AT&T currently include billing inquiries in their measurement of BOAT. 43 It is unknown at this time how many other carriers include billing inquiries and how many exclude billing inquiries in their measurement of BOAT.

Similarly, Pacific and Verizon included data relating to digital subscriber line (DSL) service in some measures and for some time periods, but excluded DSL data when the service was transferred to their affiliates. 44 The impact on service quality measures from these transfers of DSL service from local exchange operations to affiliates is unclear.

We recognize that, during the normal course of their businesses, carriers will from time to time make changes that could affect the character and attributes of their service quality data. If the Commission is aware of such changes when they occur, it will be able to understand the effect of those changes on reported service quality information, and can better assess the validity of any comparisons and conclusions it attempts to make about that information. Therefore, we propose to establish criteria concerning the specific services that may be included in reported service quality measures, and require carriers to inform the Commission whenever changes occur in business arrangements or processes that affect the composition of the raw data underlying reported service quality results.

We seek comment on which services should be included under each of the measures we propose to adopt. We also seek comment as to when and how carriers should inform the Commission of changes to business arrangements or processes affecting the composition of the raw data underlying service quality measures.

Because carriers employ significantly different methods for measuring and reporting service quality information and because we are concerned that certain measures reported to the Commission may not accurately reflect carriers' actual service quality, we propose to revise and refine existing measures and standards to ensure greater comparability and continuity of reported information. We seek comment on whether the procedures proposed here will result in accurate quantification of each measure we propose to adopt. Where commenters contend the proposed methods are inadequate or inaccurate, we ask for specific step-by- step procedures that achieve our desired goal of comparable information.

The Commission has established standards for some, but not all, existing service quality measures. For example, the G.O. 133-B Toll Operator Answering Time (TOAT) measure requires 85% of customer calls be answered within 10 seconds and Directory Assistance Operator Answering Time (DAOAT) measures require 85% of calls be answered within 12 seconds, while TRSAT and BOAT measures require 80% of calls be answered within 20 seconds.45 However, no standards exist for requests for service delayed over 30 days due to lack of telephone utility plant (i.e., "held orders"), so carriers have no idea what level of performance is acceptable. Therefore, we intend to monitor carrier data, and to propose standards for measures like held orders where no standards currently exist.

Where we now have standards, they are generally too low. For example, information Pacific submitted to staff shows BOAT results of 80.3% for September 1998 (just exceeding the 80% minimum standard), even though many calls to the business office were not answered at all during that same month (a large percentage of calls to the business office encountered busy signals). 46

Many states have more stringent service quality standards than those contained in G.O. 133-B. For example, the Ohio PUC has standards requiring 100% of installations to be completed within 5 days and 100% of repairs be made within 24 hours.47 Importantly, some carriers apply more rigorous standards internally than our current rules require.

For example, Verizon says that its internal standards are more stringent and inclusive than those imposed by our rules, and that neither GO 133-B data nor the Federal Communications Commission's (FCC's) Automated Reporting Management Information System (ARMIS) service quality measures are adequate to satisfactorily evaluate its service quality.48 Given our experience in California, we also believe it is time to upgrade our standards. Therefore, we intend to revise the standards for existing measures and implement standards for new measures.

Moreover, even where G.O. 133-B sets minimum standards, no mechanisms are in place to encourage carriers to achieve or maintain the standards, or to discourage carriers from failing to keep service above minimum standards. As mentioned above, the ORA/Verizon settlement approved in D.94-06-011 established a Service Assurance Guarantee Program that included a limited-term SQAM, and the Commission adopted a permanent SQAM for CUCC in D.95-11-024. These SQAMs contain financial penalties for failure to improve service quality, and as a result Verizon's and CUCC's service quality improved.

The Presiding Officer has also recently approved a settlement between the Utility Consumers' Action Network (UCAN), Pacific and its affiliates that provides for credits to customers for DSL billing errors.49

Other state regulatory agencies have documented deteriorating service quality in recent years, and some have found it necessary to penalize utilities for inadequate service performance. Some states have also added monetary-based performance assurance mechanisms to their service quality rules. For example, Ohio50, Michigan51 and Arizona52 impose financial penalties for inadequate service quality.

The Commission has already established similar service performance guarantee credit programs for large energy utilities. For example, in 1999, the Commission approved a settlement between the San Diego Gas & Electric Company (SDG&E) and several parties (SDG&E Settlement) that provides incentives for SDG&E to meet its:

Under the SDG&E Settlement, SDG&E can earn or lose up to $14.5 million from the incentives and penalties associated with performance indicators.

The Commission also adopted a quality assurance program for the Pacific Gas and Electric Company (PG&E) that contains customer service standards for:

PG&E is required to compensate customers in amounts ranging from $25.00 to $100.00, if any of the standards are not met.54

D.01-12-021 found Pacific's service quality lacking and deteriorating. That decision established a penalty mechanism to ensure that Pacific meets specified standards for initial and repeat out-of-service repair intervals. In any calendar year in which Pacific fails to meet either of the adopted standards, Pacific must pay a penalty of $300,000 for each month of the year in which it fails to meet a particular standard.55 To date, Pacific has not reported, nor have we audited, any instances of failing to meet the repair interval standards, indicating the penalty mechanism may be accomplishing its intended goal. We also believe CUCC's SQAM described above provides the incentives needed to ensure adequate service quality.

We believe that SQAMs providing direct compensation to customers and financial penalties can be very effective in promoting and maintaining service quality. Our experience with CUCC's service quality performance with and without a SQAM, and the need to establish a performance mechanism for Pacific's repair service provide clear lessons Therefore, we propose to implement SQAMs for our telephone service quality measures to help prevent service quality from deteriorating.

We propose direct compensation to customers by carriers in the form of refunds or adjustments to customer accounts ("customer credits") and financial penalties paid by carriers, similar to those previously established for Pacific, Verizon, CUCC, and similar to those adopted by many other states. We seek comment on whether the proposed financial penalties and customer credits are sufficient to maintain service quality. We also seek comment on whether, when and how exceptions should be made to the imposition of financial penalties and customer credits.

43 R.01-09-001/I.01-09-002, TR. 2786 - 2787, and page 3 of AT&T response to staff's data request, respectively 44 R.01-09-001/I.01-09-002, TR. 2481-2485, and Pacific Bell response to Data Request (D.R.) 02-07-001. 45 Sections 3.6(c), 3.7(c), 3.8(c), 3.9(c), respectively. 46 Pacific, the only carrier submitting this information to staff, provided "Busy Rates" only for the period from January 1997 to March 1999, so more up-to-date information has not been examined (See Response to D.R. 02-01-001, TD 003140).

47 Chapter 4901:1-5-06, Appendix A (Telephone Customer Bill of Rights - Providing Your Service). In addition to the standards applicable to all carriers, SBC also has company-specific standards as a condition of its merger with Ameritech that require SBC to pay penalties when its performance falls below specific levels.

48 R.01-09-001/I.01-09-002, TR 2477-2478.

49 The settlement adopted in the Presiding Officer's decision in C.02-01-007 found, among other things, that Pacific's and its affiliates' unresponsive service and related service quality problems was a violation of P.U. Code § 2890(d)(2)(D). Unless appealed by October 27, 2002, the Presiding Officer's decision will become effective on that date.

50 Chapter 4901:1-5-16. 51 Michigan Public Service Commission Rule 484.32. 52 Arizona Service Quality Plan - Qwest Tariff Section 2.5. 53 D.99-05-030. 54 D. 00-02-046. 55 The standards are an annual average of 29.3 hours for Pacific's initial out-of-service repair interval and 39.4 hours for its repeat out-of-service repair interval. These standards are comparatively lenient. Ohio requires 100% of out-of-service repairs to be completed within 24 hours, Alabama requires 90% to be cleared within 24 hours and New York requires 80% to be cleared within 24 hours.

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