Customers vs. Verizon

The Baltimore Sun

State utility regulators and union officials questioned yesterday what consumers will gain from a proposed agreement with telephone provider Verizon in settling concerns over delayed repairs as well as deregulating some services.

The settlement stems from a 2007 Maryland Public Service Commission investigation into hundreds of complaints that Verizon technicians routinely missed repair appointments with customers, leaving thousands without service for more than four days.

Verizon and PSC staff members structured a settlement that must be approved by the five-member commission. Commission members began hearings yesterday in Baltimore that will continue today. A ruling will be issued later.

"What I see here is a lot of benefit for Verizon, and not for consumers," said Commission Chairman Douglas Nazarian. "What's in it for the people?"

If approved, the settlement calls for Verizon to pay $10.88 to current residential customers who were without service for more than four days, as well as $2.77 to those whose appointments were not honored. In addition, in the future, if the average time to restore service is more than two calendar days, the company would pay up to $4 million, to be divided among affected residents.

Verizon, Maryland's largest telephone provider, would also lower the price customers in the region pay to avoid long-distance charges to areas such as Washington and Baltimore if they sign up for bundled telephone packages. That fee would be lowered to $2 from its current $14 under the settlement.

Also, the company would raise basic dial-tone service rates by $1 in June, in addition to 38 cents under the existing price-cap plan. That service is typically the bare-bones calling plan that ranges from $6 to $15. In exchange, the company would agree to freeze rates for the next three years for that service. That would bring in about $14 million, company officials testified yesterday.

Vincent Trivelli, an attorney for the Communication Workers of America, which represents 5,000 Verizon employees, questioned how company representatives will ensure reliable and available service. He complained that the agreement did not specify how much money will be spent on the existing copper wire network or staffing levels.

He said the company has offered some staff retirement packages and has said that they have too many workers."We don't know exactly what will be required going forward," said John R. Gilbert, Verizon's vice president for regulatory affairs. "We need to have freedom to run the business as appropriate at the time."

Nazarian took issue with the settlement's limit on penalties for meeting service benchmarks. For example, the proposed agreement says penalties will not be enforced if Verizon's market share drops below 50 percent. Gilbert would not detail how much market share Verizon currently has in Maryland.

The company wants regulators to allow it some flexibility in pricing on bundled packages so it can better compete with cable companies and others that offer telephone services but are not subject to PSC oversight.

During questioning, Gilbert said the two-day average repair time would include fixes for business customers, who are given priority over residential lines.

"How should we have any confidence that the market will demand adequate service quality of Verizon if these [penalty] payments go away?" Nazarian asked.

Gilbert said after the hearing that even if the terms of the agreement are accepted, the commission still has the authority to penalize Verizon for poor service. "They can still enforce all of the existing regulations," he said.

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