Coalition for Customer Choice: 'Trouble on the Line' Explains Ameritech Service Decline

Apr 10, 2001, 01:00 ET from Coalition for Customer Choice

    COLUMBUS, Ohio, April 10 /PRNewswire/ -- The Coalition for Customer Choice
 today released the contents of a report -- based on information provided by
 Ameritech itself -- that details how the company failed to make needed
 investments in its telecommunications infrastructure, failed to deploy
 promised high-tech network innovations, reduced staff below comparable
 companies' levels and made far higher profits than its counterparts during the
 last half of the 1990s.  The report -- "Trouble on the Line: Ameritech's
 Infrastructure Disinvestment and Service Decline" -- brings together for the
 first time the documentation that explains why Ohioans had to suffer through
 one of the worst local telephone customer service failures in the country last
 year.
     Wayne Hill, executive director of the Coalition for Customer Choice, said,
 "When Ameritech lobbied successfully to lift restrictions on their profit-
 earning ability, it promised to provide customers with improvements,
 innovations and infrastructure enhancements. We said then that what Ameritech
 termed 'Advantage Ohio' really should be called 'Advantage Ameritech' and
 that's exactly what it's turned out to be.  Last year's precedent-shattering
 customer service problems not only inconvenienced residential and business
 customers, it also frustrated effective use of the company's network by
 potential competitors, extending monopoly control of local service markets.
 We're extremely concerned that this lack of investment in basic infrastructure
 could result in more of the same problems in coming months if the situation is
 not corrected."
     The study, released by the Coalition, was made possible by funding from
 AT&T, a Coalition member.  The Coalition consists of numerous Competitive
 Local Exchange Carriers (CLECs) that are working to provide residential and
 business consumers with the benefits of being able to choose their local
 telephone service company.
     Key findings of the report include:
 
     * Workforce cuts -- Ameritech (and its predecessor, Ohio Bell) cut their
       workforce from 1988 through 1999, reducing the number of employees per
       access line every single year. Those cuts were 25% greater than those of
       other comparable Regional Bell Operating Companies (RBOCs) during the
       same period.
     * Insufficient investment in infrastructure -- Other RBOCs spent one-third
       more per access line than Ameritech to maintain, modernize and upgrade
       the telephone network. In 1999, Ohio ranked 45th among 50 states in this
       key measurement.
     * Investment shortfall -- Ameritech invested approximately five billion
       dollars less in its infrastructure than the average invested by its
       industry counterparts from 1988 to 1999.
     * Service problems -- In Ohio, the total number of customer complaints
       during 1999 exceeded the average among other RBOCs by 37%.
     * Record profits -- This is the area where Ameritech beat the other RBOCs,
       gaining a far higher return on investment than its industry
       counterparts.  From 1995 to 1999, its average return on equity was
       34.9%, nearly double that of comparable companies during the same
       timeframe.
 
     "The conclusions are inescapable," Hill said.  "Despite its promises,
 Ameritech decreased its investment and cut its staff, yielding far higher
 profits for itself and much worse telephone service for its customers. The
 failure to modernize and upgrade the network and maintain an experienced,
 qualified workforce has complicated the ability of Competitive Local Exchange
 Carriers to access the SBC/Ameritech network in an efficient and timely way.
 Thus, Ameritech's behavior during the 1990s has both degraded service and
 blocked the possibility for real competition -- the only long-term solution
 for long-suffering consumers."
     The report, which was forwarded to the legislature, members of the Public
 Utilities Commission of Ohio, the Ohio Consumers Counsel and to the Governor's
 Office, makes the following recommendations:
 
     * Conduct a full audit of SBC/Ameritech to uncover additional data that
       may affect how the company should be regulated, particularly its
       requirement to provide quality service to residents, businesses and
       competing local phone companies.
     * Require the company to make regular reports on its promises to rebuild
       and maintain the telephone network infrastructure.
     * Prevent the company from making further dividend payments to its
       corporate parent (SBC) until it has demonstrated conclusively that it
       has fixed its extraordinary service problems.
     * Impose meaningful penalties if SBC/Ameritech fails to meet the state's
       Minimum Telephone Service Standards, including service to competitive
       local telephone companies as well as residential and business customers.
 
 

SOURCE Coalition for Customer Choice
    COLUMBUS, Ohio, April 10 /PRNewswire/ -- The Coalition for Customer Choice
 today released the contents of a report -- based on information provided by
 Ameritech itself -- that details how the company failed to make needed
 investments in its telecommunications infrastructure, failed to deploy
 promised high-tech network innovations, reduced staff below comparable
 companies' levels and made far higher profits than its counterparts during the
 last half of the 1990s.  The report -- "Trouble on the Line: Ameritech's
 Infrastructure Disinvestment and Service Decline" -- brings together for the
 first time the documentation that explains why Ohioans had to suffer through
 one of the worst local telephone customer service failures in the country last
 year.
     Wayne Hill, executive director of the Coalition for Customer Choice, said,
 "When Ameritech lobbied successfully to lift restrictions on their profit-
 earning ability, it promised to provide customers with improvements,
 innovations and infrastructure enhancements. We said then that what Ameritech
 termed 'Advantage Ohio' really should be called 'Advantage Ameritech' and
 that's exactly what it's turned out to be.  Last year's precedent-shattering
 customer service problems not only inconvenienced residential and business
 customers, it also frustrated effective use of the company's network by
 potential competitors, extending monopoly control of local service markets.
 We're extremely concerned that this lack of investment in basic infrastructure
 could result in more of the same problems in coming months if the situation is
 not corrected."
     The study, released by the Coalition, was made possible by funding from
 AT&T, a Coalition member.  The Coalition consists of numerous Competitive
 Local Exchange Carriers (CLECs) that are working to provide residential and
 business consumers with the benefits of being able to choose their local
 telephone service company.
     Key findings of the report include:
 
     * Workforce cuts -- Ameritech (and its predecessor, Ohio Bell) cut their
       workforce from 1988 through 1999, reducing the number of employees per
       access line every single year. Those cuts were 25% greater than those of
       other comparable Regional Bell Operating Companies (RBOCs) during the
       same period.
     * Insufficient investment in infrastructure -- Other RBOCs spent one-third
       more per access line than Ameritech to maintain, modernize and upgrade
       the telephone network. In 1999, Ohio ranked 45th among 50 states in this
       key measurement.
     * Investment shortfall -- Ameritech invested approximately five billion
       dollars less in its infrastructure than the average invested by its
       industry counterparts from 1988 to 1999.
     * Service problems -- In Ohio, the total number of customer complaints
       during 1999 exceeded the average among other RBOCs by 37%.
     * Record profits -- This is the area where Ameritech beat the other RBOCs,
       gaining a far higher return on investment than its industry
       counterparts.  From 1995 to 1999, its average return on equity was
       34.9%, nearly double that of comparable companies during the same
       timeframe.
 
     "The conclusions are inescapable," Hill said.  "Despite its promises,
 Ameritech decreased its investment and cut its staff, yielding far higher
 profits for itself and much worse telephone service for its customers. The
 failure to modernize and upgrade the network and maintain an experienced,
 qualified workforce has complicated the ability of Competitive Local Exchange
 Carriers to access the SBC/Ameritech network in an efficient and timely way.
 Thus, Ameritech's behavior during the 1990s has both degraded service and
 blocked the possibility for real competition -- the only long-term solution
 for long-suffering consumers."
     The report, which was forwarded to the legislature, members of the Public
 Utilities Commission of Ohio, the Ohio Consumers Counsel and to the Governor's
 Office, makes the following recommendations:
 
     * Conduct a full audit of SBC/Ameritech to uncover additional data that
       may affect how the company should be regulated, particularly its
       requirement to provide quality service to residents, businesses and
       competing local phone companies.
     * Require the company to make regular reports on its promises to rebuild
       and maintain the telephone network infrastructure.
     * Prevent the company from making further dividend payments to its
       corporate parent (SBC) until it has demonstrated conclusively that it
       has fixed its extraordinary service problems.
     * Impose meaningful penalties if SBC/Ameritech fails to meet the state's
       Minimum Telephone Service Standards, including service to competitive
       local telephone companies as well as residential and business customers.
 
 SOURCE  Coalition for Customer Choice

RELATED LINKS

http://www.ameritech.com