Thursday, August 27, 2009

Verizon Service Quality Performance Lags

In a new report issued August 27, 2009, PULP reviews Verizon telephone service quality data over recent years. See Answering the Call - Does Verizon - New York's Service Quality Performance Justify Annual Rate Increases?, written by PULP Senior Staff Attorney Lou Manuta.

The report finds that even with a 54,5% increase in basic phone service rates allowed by the PSC in the three years since June 2006, Verizon is not hitting important customer service quality targets. The result is more service outages exceeding 24 hours, more trouble reports, and more complaints.

In a number of instances, Verizon's performance rallied just prior to PSC approval of annual rate increases, only to fall back when the increases took effect. More recently, however, performance was well below the targets both before and after the rate increase approval. The PSC is merely "monitoring" the deterioration in service quality, and has not imposed any monetary consequences upon Verizon, though it has power to do so.

The PSC's deregulatory approach seems to be that Verizon customers unhappy with service quality can vote with their feet, and get service elsewhere.

The problem is that the PSC relies on a competition that does not really exist to the degree it wishes. At best there is a duopoly or oligopoly market structure for services desired by customers, with the bulk of the telephone market for popular "triple play" telephone, internet and TV service typically divided between Verizon and a local cable company provider. The degree of service quality appears largely to be left to the duopoly providers, who may have mutual interests in maximizing profit by keeping overtime budgets low and not providing swift repairs. The PSC has not adopted service quality and consumer protection measures that should apply no matter who provides the telephone service.

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