Regulators propose tying Verizon rate increases to service improvements

Order responds to tens of thousands of complaints

February 04, 2010|By Gus G. Sentementes and Liz F. Kay

State regulators proposed Wednesday that Verizon's ability to raise rates on some basic telephone services be directly tied to the company's efforts to improve customer service - a requirement that would be a regulatory first in Maryland.

The proposed order from the Maryland Public Service Commission is in response to complaints from nearly 80,000 customers who experienced lengthy delays in customer service in 2007 and 2008.

"We're hoping that now this will provide the path for Verizon to remedy its long-standing statewide ... service problems," said Theresa Czarski of the state Office of the People's Counsel, which represents consumers' interests before the PSC. "This time Verizon won't be able to increase prices until they show they've made real strides in fixing service quality problems."

The PSC's order built on a proposed resolution from Verizon, which has offered to pay a $1 million in bill credits and to lower certain fees for regional telephone service while increasing others. Affected consumers would get a credit of between $2 and $10 on their phone bills under that proposal, which the PSC incorporated into its order.

The proposals apply to copper-wire telephone service, which is regulated by the state commission, and not cell phone or its FiOS Internet, television and cable service.

Verizon has 20 days to approve or reject the proposal. Company officials say they are still reviewing it, though William R. Roberts, Verizon president for Maryland and Washington, D.C., said in a statement that the settlement "will provide consumers with substantial benefits.

"Based on our preliminary review of the order, we are encouraged by the recognition that Verizon is committed to provide our customers in Maryland with a high level of service quality," he said.

The PSC described its modified proposal as "the beginning of a new regulatory paradigm." Verizon's ability to raise prices hasn't been tied to customer service performance, but the PSC's proposed order is pushing for such a connection.

In previous agreements, the company had offered to pay $4 million per year in penalties if it continued to miss service quality targets, and later increased that amount to $6 million. Customers who were out of service for long periods of time could receive payments of as much as $30 if Verizon failed to meet service quality targets outlined in the proposal.

In addition, the service quality plan will only conclude when Verizon hits its targets for out-of-service calls and missed appointments for four consecutive quarters.

Verizon, Maryland's largest telephone company, also has been seeking more flexibility to change prices on company phone services that are provided by competitors who don't face the same regulatory scrutiny.

If Verizon rejects the PSC proposal, six consumer-related cases before the commission would resume.

Ron Collins, vice president of the regional district of the Communications Workers of America, which represents Verizon employees in Maryland and surrounding states, said the agreement doesn't hold the company accountable enough. CWA has complained that job cuts and shifting workers to fiber-optic service has resulted in deteriorating customer service.

Although the settlement calls for Verizon to provide data about response times for service requests, "part of our argument is that Verizon can manipulate those numbers," he said.

An earlier version of this article misstated how many Verizon customers had experienced customer service delays in 2007 and 2008. The Baltimore Sun regrets the error.

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