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Playing Monopoly


By Matt Smith Wednesday, Apr 5 2000

(Linette Young, above, discovered that Pacific Bell comitted frauds to conceal problems in its infrastructure)

 


It's springtime, when a boy's thoughts naturally turn to Barry Bonds bay-water slams out of Pacific Bell Park. And to TV interviews of Willie Mays, ensconced in his Pacific Bell skybox. And to Kirk Rueter fastballs, hurtling toward home plate -- and the Pacific Bell logo on the backstop behind it. In fact, if a $50 million investment in naming rights for the Giants' new stadium is on the mark, boys' thoughts will turn, each spring for years, toward a vague association between Pacific Bell and the balmy goodness of baseball afternoons.

 

This heartwarming narrative of positive consumer brand identification, which is being told and retold by Bay Area newspapers and television stations ad nauseam, is, of course, a corporate myth; there is no real connection between Pac Bell or its policies and the enduring satisfaction of outdoor baseball. But luckily for us, we don't have to rely on corporate mythology for our springtime satisfaction; the wonder of America's free market economy has given us a real story about Pacific Bell and the vibrancy of the human spirit.

The next time the boys on the bus sit down to write a baseball story that includes the mention of Pacific Bell Park, they might do well to keep this second narrative in mind.

It's the story of a 46-year-old former welfare mother from Vallejo who embarked on a two-year quest to learn about deteriorating local phone service in California. It's the story of how Pacific Bell has, by all appearances, lied to the public about delays in telephone hookups and repairs, just as the digital revolution was making high-quality local phone service essential. It's the story of how the shoddy service and lying of Pacific Bell could, if regulators did their jobs, open the firm to state sanctions. It's the tale of state regulators who seem to have turned a blind eye to Pacific Bell service problems and lying.

But finally it's the story of Linette Young, a good-natured yet forceful crusader who operates in the tradition of Karen Silkwood or Erin Brockovich, and who continues to press on. "Sometimes it's against all odds," she says. "But we keep fighting for it, though."

Linette Young recalls vividly the moment she realized she was nobody's fool.

It was 1995, and Young was working as a technician at the UC Davis Remote Sensing Lab, which uses infrared and heat-sensitive imagery from satellites to produce maps. Young's position seemed miles away from her previous life as a single parent who was condescended to by indifferent welfare bureaucrats, and disregarded by people who thought themselves to be above her on the economic totem pole. Now, after putting herself through college at UC Davis, her life seemed poised for a dramatic change.

"I had been given the assignment of setting up a remote sensing conference in Washington. It was a blast," Young says. "I was invited to dinner with my boss, and there were these Ph.D.s, there were people from NASA. I was in a beautiful restaurant with all these people with incredibly intelligent jobs. I opened up my mouth, and I started talking and contributing to the conversation, and these people started listening to me. From that moment in time, I felt like I had finally gained that respect I didn't have. It changed my life."

Two years later, while working toward a public policy master's degree at California State University at Sacramento, Young took a job at the California Public Utilities Commission Office of Ratepayer Advocate. This office acts independently of the commission, advising it on rules and policies affecting consumers served by regulated private monopolies such as Pacific Bell and PG&E.

"I was still in graduate school trying to think of a project to write my thesis on, and during 1997 and 1998, the Public Utilities Commission was flooded with complaints about [telephone] installations and repair problems," says Young. "They asked me to go through and make a database of these complaints -- the informal complaints of people at the end of their rope. I started reading these letters; they would range from people really annoyed to some real horror stories. There was a pattern to the complaints. People were complaining about the same problems over and over again, usually tied to a delay in getting either repair work done or an installation done."

Young's analysis seemed to provide evidence for the notion that Pacific Bell was doing what monopolies always do -- milk their franchises for all they can, then lie about the milking. When industries in truly open markets behave this way, their competitors drive them out of business. But the free market hasn't made much headway into the provision of local telephone service.

In Pacific Bell's case, there were people with elderly family members who had had to wait months for an extra phone line. There were families with children at home who couldn't get a phone for months. Others took jobs requiring an extra home phone line -- then discovered they couldn't get one installed for weeks.

"I was appalled. I would read these things, and some of these stories are really sad," Young recalls. "They were hurting a lot because they couldn't get the service. Some were trying to get a line repaired for an elderly parent. If you've got small kids, if you're at work, you want them to call you, so you know they're alive."

Young had found a thesis topic, but the scattershot nature of the complaint data she was given created special analytical challenges. Consumer complaints to the Public Utilities Commission aren't the best information source for a thoroughly accurate analysis of Pacific Bell's overall service quality. For one thing, people don't tend to sit down with pen and envelope until they're completely exasperated. For another, people of higher educational and income levels tend to be louder complainers than poorer or less educated folks; studying only the complaints of the well-to-do could lead to skewed results.

Still, Young went to work two years ago teasing apart the available data.

"I read something like 1,600 letters, every single one individually. If I could calculate days out of service, I would, and I would require a beginning date and an ending date. If they had a problem of line static, problems connecting to the Internet, if they called the phone company, and the phone company missed the appointment, and the problem was still there -- I noted every little piece of information."

The rough picture that began to form showed a telephone company that apparently had a basic infrastructure problem during a period of unprecedented line growth. Rather than adequately ramp up investment in its infrastructure, the complaint letters seemed to show, Pacific Bell put out fires. Problems were at their very worst in Silicon Valley, and the worst delays in service tended to be for second and third telephone lines.

But to be sure of her conclusions, Young needed better data. So she enlisted an East Bay survey company to poll telephone users throughout California. They interviewed 30 residential users and 30 business users in every California area code, asking about Pacific Bell service delays. They then did a statistical analysis of the survey data.

"Guess what we found?" Young asks. "Delays. The geography was on the money. The types of problems most frequently cited were the types of problems that were cited in the complaints."

As Young was performing her study, Pacific Bell had reported to the California government that it had only 32 installation orders delayed more than the 30-day reporting threshold during 1997, and no such delays during 1998, according to the Office of Ratepayer Advocate.

At about this time SBC Communications, the San Antonio company that bought Pacific Bell in 1998, submitted service quality data to the federal government in hopes of gaining approval for a $62 billion merger with Ameritech Corp. (The merger was approved late last month.) From July to December of 1999, SBC reported that Pacific Bell had 9,000 orders delayed 30 days or more, saysDale Piiru, an analyst at the advocate office.

Something remarkable was going on, these numbers seemed to show: Either Pacific Bell's service department imploded during 1999, or the company had lied to state regulators about its service during the previous two years.

The answer may lie in Pacific Bell's own files. But it's not telling. Pacific Bell responded to Young's requests for information by saying it "didn't keep installation records."

Pacific Bell, through spokesman John Britton, told me that the company has not suffered significant numbers of service delays, and that any reports to the contrary are false. The Public Utilities Commission decided last month not to investigate Pacific Bell's service quality, Britton said, proof enough that the company is doing an exemplary job. "There aren't service delays," Britton said, adding that his company has provided the PUC with all the data required under state law.

The PUC says it does not consider Young's thesis to be an official government document, but, rather, her own personal work.

Still, it seems to be very thorough work. After Pacific Bell declined to provide her with installation records by saying they did not exist, Young decided to test the phone company's truthfulness.

She selected what seemed to be the 48 most egregious complaints about delayed service orders from her database of 1,600 complaints received by the PUC during 1997 and 1998 (years when Pacific Bell reported virtually no such delays). She sent the information to Pacific Bell for an explanation.

"Before we can say that there are held orders Pacific Bell didn't report, and then nail them on it, we have to verify it and prove it," Young explains. In her request to Pacific Bell, Young included the telephone numbers of the customers who experienced delayed service, but not the PUC complaint numbers; to answer her inquiry, she believed, Pacific Bell would have to use its own records, rather than the government's.

"They responded with explanations saying, 'It was a third telephone line,' things like that," Young recalls.

Bingo. Pacific Bell did keep service records. They just weren't giving them up.

For more than a year the Office of Ratepayer Advocate has made repeated requests for service data from Pacific Bell. And for more than a year, Ratepayer Advocate analyst Dale Piiru says, Pac Bell has refused to comply.

Britton, the Pacific Bell publicist, says his company gives the state government all the data required under law.

But Young's data seems to point to a yawning gap between what Pacific Bell is telling the public and the truth about the company's ability to provide quality telephone service to its customers. Piiru would like to perform an audit using raw Pacific Bell service data.

Which brings us to the dark side of Pacific Bell, and baseball, and balmy San Francisco springtime afternoons.

Pacific Bell and its parent, SBC Communications, are one, combined, greedy behemoth, feeding off the digital revolution, draining the Bay Area of its telecommunications lifeblood.

Any economist worth her salt will tell you monopolistic businesses like Pacific Bell turn the rules of free enterprise on their head, and transform the presumably beneficent forces of an open market into a type of tyranny. In competitive business environments, companies earn profits by improving service and products, by lowering prices, by inventing new ways of doing business, and by creating technological innovation. Rather than gaining ground through efficiency, a monopolist like Pacific Bell profits by shutting other companies out of its markets, and sometimes underserving and/or gouging customers.

At the turn of the century the novelists Upton Sinclair and Frank Norris illustrated these abuses in the oil and railroad industries. Those sensibilities were behind the 1890 Sherman Antitrust Act, which in turn spawned the 1911 breakup of the Standard Oil monopoly. Years later Justice Department attorneys forced a similar breakup of the AT&T nationwide telephone monopoly. But the public's, and the courts', ideas about the evil nature of monopolies have softened dramatically since then; witness the Justice Department's difficulties in sanctioning Microsoft engaged for monopolistic practices. But monopolies remain pernicious just the same. And SBC/Pacific Bell is among the worst.

Pacific Bell has stymied innovation, kept phone service prices at artificial levels, been arrogant with customers -- and yet it has thrived.

In 1996 Congress attempted to free up local telephone markets by allowing the regional local telephone companies born of the breakup of AT&T to provide long distance telephone service -- on the condition they also opened their local markets to competition. As Young's quest suggests, this carrot-without-stick approach to monopoly-busting has proved meaningless.

Instead of freeing local markets, the Baby Bells have used the 1996 act to merge with each other. In the last three years, SBC has acquired Midwestern local phone company Ameritech, Pacific Bell, and other properties and now controls around a third of local phone service in the country.

In San Francisco, Pacific Bell has for four years delayed installing the equipment necessary for competing phone companies to connect with Pacific Bell lines. The U.S. Justice Departmentrecently told the Federal Communications Commission that SBC should not be allowed to enter the long-distance market in Texas because the company does not reliably deliver access to telephone lines to its rivals.

"Certainly they're not motivated," says Christine Mailloux, an attorney for Northpoint Communications, which seeks to provide Bay Area DSL Internet service through Pacific Bell phone lines. Local telephone monopolies have meant that the whirlwind of innovation that has surrounded virtually every other area of telecommunications has come to a halt at customers' doors, where stodgy monopoly companies provide local service.

"You have all this innovation out there, and then it stops at the local loop," says Ross Mayfield, president of Ratexchange, a San Francisco telecom start-up.

I have my own baseball afternoon fantasy. In it, SBC Communications isn't worth many tens of billions of dollars, regulators and legislators look less kindly on huge corporate monopolies, and the public is unaffected by public relations myths such as Opening Day at Pacific Bell Park. In this dream, government attorneys really, truly force an end to the Pacific Bell local telephone service monopoly.

Until that happens, I'd like to make a simple request of my colleagues in the press. There's an old journalistic ethic that says nobody gets to buy space in a paper's news pages. That's where readers expect to find news, not corporate PR. Fifteen years ago, when local developers got a few million from Arco to build an arena for the Kings basketball team in Sacramento, this ethic meant that, for a while at least, reporters at the Sacramento Bee looked for ways around calling the structure Arco Arena -- "Kings Arena," "the arena," and the like.

We don't have to call the stadium at Fourth and King streets Pacific Bell Park. There's "Giants Stadium," or "the San Francisco Stadium," or, just, "the stadium."

Whaddaya say guys? If for nothing and no one else, do it for Linette.

Matt Smith (Matt.Smith@sfweekly.com) can be reached atSF Weekly, 185 Berry, Suite 3800, San Francisco, CA 94107.

 

 

 

 

 

 

 

 

 

 

 

 

Pacific Bell Respoonse to Data Request, October 1, 2001

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