GAO

United States General Accounting Office

Report to the Ranking Minority Member,

Committee on Commerce, Science, and

Transportation, U.S. Senate

August 2000 TELECOMMUNICATIONS

Issues Related to

Local Telephone

Service

GAO/RCED-00-237

Page 1 GAO/RCED-00-237 Local Telephone Services

Contents

Letter 3

Appendixes Appendix I: Scope and Methodology 30

Appendix II: Trends for Percent of Customers Dissatisfied,

1996 and 1999 32

Appendix III: GAO Contacts and Staff Acknowledgements 51

Tables Table 1: Estimated Access Lines Sold in Rural Areas,

January 1996-April 2000 11

Table 2: Estimated Percent of Rural Access Lines Involved in

Pending Sales 16

Table 3: Percent of Residential Customers Dissatisfied With

Installation Services, 1996-99 33

Table 4: Percent of Residential Customers Dissatisfied With

Repair Services,

1996-99 35

Table 5: Percent of Residential Customers Dissatisfied With

Business Office Services, 1996-99 37

Table 6: Percent of Small Business Customers Dissatisfied With

Installation Services, 1996-99 39

Table 7: Percent of Small Business Customers Dissatisfied

With Repair Services, 1996-99 41

Table 8: Percent of Small Business Customers Dissatisfied

With Business Office Services, 1996-99 43

Table 9: Percent of Large Business Customers Dissatisfied With

Installation Services, 1996-99 45

Table 10: Percent of Large Business Customers Dissatisfied

With Repair Services, 1996-99 47

Table 11: Percent of Large Business Customers Dissatisfied

With Business Office Services, 1996-99 49

Figures Figure 1: States Where Major ILECs Sold Access Lines,

January 1996-April 2000 10

Figure 2: Access Lines Sold by Major ILECs in Rural and

Nonrural Areas January 1996—April 2000 12

Figure 3: Rural and Nonrural Access Lines Sold by Major

ILECs January 1996—April 2000 13

Figure 4: Estimated Rural Access Lines Sold by Major ILECs,

January 1996-April 2000 14
Contents

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Figure 5: States With Pending Sales of Access Lines, as of

April 2000 15

Figure 6: Timeline of DSL Development Activities 19

Figure 7: Complaints per 1,000 Access Lines for Major ILECs,

1996-99 24

Figure 8: Total Customer Complaints Per 1,000 Lines, 1996-99 25

Figure 9: Business Versus Residential Customer Complaints, 1999 27

Figure 10: Percent of Residential Customers Dissatisfied With

Installation Services, 1996-99 34

Figure 11: Percent of Residential Customers Dissatisfied With

Repair Services, 1996-99 36

Figure 12: Percent of Residential Customers Dissatisfied With

Business Office Services, 1996-99 38

Figure 13: Percent of Small Business Customers Dissatisfied With

Installation Services, 1996-99 40

Figure 14: Percent of Small Business Customers Dissatisfied

With Repair Services, 1996-99 42

Figure 15: Percent of Small Business Customers Dissatisfied

With Business Office Services, 1996-99 44

Figure 16: Percent of Large Business Customers Dissatisfied With

Installation Services, 1996-99 46

Figure 17: Percent of Large Business Customers Dissatisfied

With Repair Services, 1996-99 48

Figure 18: Percent of Large Business Customers Dissatisfied

With Business Office Services, 1996-99 50

Abbreviations

ADSL asymmetric form of DSL

ARMIS FCC's Automated Reporting Management Information System

CLECs Competitive local exchange carriers

DSL digital subscriber line

FCC Federal Communications Commission

ILECs incumbent local exchange carriers
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United States General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-285105 Letr

August 31, 2000

The Honorable Ernest F. Hollings

Ranking Minority Member

Committee on Commerce, Science,

and Transportation

United States Senate

Dear Senator Hollings:

As you know, the Telecommunications Act of 1996 fundamentally changed

the laws and regulations governing the telecommunications industry.

Through this act, the Congress sought to increase competition in local

telephone service and reduce regulation in order to secure lower prices and

higher quality services for consumers and to encourage the rapid

deployment of new telecommunications technologies, such as digital

subscriber line (DSL), which, among other things, enables high-speed

access to the Internet. Overall, the time since the act’s passage has been

characterized by significant adjustments for regulators, companies, and

consumers. A variety of companies, including incumbent telephone

companies and new competing carriers, have spent considerable resources

responding to the incentives and obligations created by the act. They have

pursued new business plans, developed new technologies, invested in new

facilities, restructured their businesses through mergers, and otherwise

refocused their companies toward the future. One aspect of these activities

involves the sale of telephone facilities, including access lines (that is, the

connection between customers and a local telephone company’s central

office),1 in rural areas—those areas outside of a metropolitan statistical

area.2

1 Sales of telephone facilities typically include the sales of access lines, local switches, and

trunks. The local switches connect access lines for the duration of the telephone calls, and

trunks connect one local switch to another or to the long distance network. The size of a

telephone facility sale is expressed by the number of access lines served.

2 The general concept of a metropolitan statistical area is that of a core area containing a

large population nucleus, together with adjacent communities having a high degree of

economic and social integration with that core. The current standards provide that each

newly qualifying metropolitan statistical area must include at least one city with 50,000 or

more inhabitants, or a Census Bureau-defined urbanized area (of at least 50,000 inhabitants)

and a total metropolitan population of at least 100,000 (75,000 in New England).
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This report responds to your request for information on three issues that

relate to developments in the local telephone service market:3

• the number of rural access lines that have been sold since the act’s

passage by large incumbent local exchange carriers, known as major

ILECs;4

• the development of DSL technology and the basis for variations in its

rate of deployment; and

• the quality of local telephone service, as indicated by customer

complaints and customer survey data reported to the Federal

Communications Commission (FCC) by the major ILECs.

To respond to the first issue, we reviewed FCC data on sales of access lines

by the major ILECs since 1996. Per your request, we considered ILECs with

more than 2 percent of the total telephone access lines in the United States

as “major.” Thus, our study included the Regional Bells, GTE, and

Sprint/United, which together owned 92 percent of the access lines in the

nation as of December 31, 1998. We also surveyed 51 state utility

commissions (50 states and the District of Columbia) to obtain information

on access line sales approved by the commissions and on those still

pending their approval.5 Our survey of state utility commissions, with its

100-percent response rate, also allowed us to collect information (which

was not readily available from other sources) on the estimated number of

access lines sold in rural areas—those areas outside of metropolitan

statistical areas. To address the second issue, we reviewed publications by

FCC and others on the development of DSL, and we spoke with

communications industry officials and experts about trends in DSL

deployment. For the third issue, we analyzed two different service quality

indicators: (1) customer complaint data and (2) customer dissatisfaction

survey data. Both indicators are compiled by the major ILECs and reported

3 Local telephone service includes calls that are made within a designated geographic area

or locality without paying long distance charges.

4 ILECs include the Regional Bells as well as many other independent local telephone

carriers that were providing local telephone service before the 1996 act was passed. We

considered ILECs with more than 2 percent of the total telephone access lines in the United

States as “major.”

5 We report sales in the year the state utility commission approved them. For most sales,

FCC must subsequently approve a waiver to change an ILEC’s geographic service area. FCC

granted waivers for all sales by major ILECs that required waivers and were approved by

state utility commissions from 1996 through 1999.
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to FCC. We also reviewed studies on quality-of-service issues that FCC

developed from its own analysis of the telephone company data. Our scope

and methodology are discussed in more detail in appendix I.

Results in Brief Of the nearly 832,000 access lines sold by major ILECs from January 1996

through April 2000, an estimated 68 percent were in rural areas, according

to state utility commission officials.6 The estimated 562,000 rural access

lines sold represented only 2 percent of the major ILECs’ total rural access

lines in 1999. After a steady annual decline in sales of access lines from

1997 through 1999, the first 4 months of 2000 saw a dramatic increase in

sales, particularly in rural areas. In fact, the number of rural access lines

sold from January through April 2000 already exceeds the total number of

rural lines sold during the previous 4 years. The sharp increase in rural

sales appears to be continuing. GTE and US WEST have sales pending with

state utility commissions or FCC involving a total of over 870,000 additional

rural access lines. According to GTE and US WEST officials, their

companies made business decisions to sell access lines at several times in

the past. FCC, on the other hand, believes that most of the delay is the

result of the negotiation process between the ILEC and potential

purchasers, rather than the state and federal approval processes.

DSL technology was initially developed in the late 1980s and tested in the

early 1990s as a means for providing video services over the telephone

network. In the mid-1990s, as the Internet began to surge in popularity,

technical trials were conducted by several telephone companies to assess

the feasibility of using the asymmetric form of DSL (ADSL) for high-speed

Internet access. Although the commercial availability of ADSL did not

begin for nearly 10 years after its development, telephone companies have

rapidly deployed DSL over the past 3 years. ILECs intensified their ADSL

deployment in recent months in response to both the ADSL deployment by

competitive local exchange carriers, known as CLECs, and the cable

industry’s foray into Internet access with cable modem service. A number

of communications industry officials and some industry experts told us

that ADSL deployment did not occur sooner because the ILECs were

concerned about potential harm to revenues generated by other existing

high-speed telephone services, and because of the unproven nature of the

technology. Several ILEC officials told us that ADSL was not deployed

6 Intrastate telephone services are regulated by state agencies, generally called public utility

commissions. In this report, we refer to these agencies as state utility commissions.
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sooner because trials of ADSL for delivery of video services had been

unsuccessful, the technology had various technical limitations, and federal

regulations that had been issued for ADSL lines serve as a disincentive to

its more rapid deployment.

We reviewed two key indicators that raise concerns about the quality of

telephone service. First, the number of customer complaints to state and

federal regulators about the quality of local telephone service fell slightly

between 1996 and 1997 but increased after 1997 to a significantly higher

level than that in 1996, as measured by the number of complaints per 1,000

access lines filed with state utility commissions and FCC. The increases are

attributable to higher complaint levels for five of the eight major ILECs

included in our analysis of complaint data. Second, according to telephone

companies’ own customer surveys for 1996 through 1999, there is no clear

trend in the overall level of customer dissatisfaction; the levels vary from

company to company by the type of customer and type of service.

However, most of the major ILECs experienced increases in customer

dissatisfaction in 1999 (the most recent available data) compared with

1998.
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Background AT&T’s domination of the local telephone markets came to an end in 1984,

in the aftermath of an antitrust suit brought by the Department of Justice,

which alleged that the company was engaging in anticompetitive behavior

to the detriment of new competitors in the long distance and telephone

equipment markets.7 Under a consent decree, AT&T was required to divest

its ownership of the 22 Bell Operating Companies. These 22 companies

were initially reorganized into seven Regional Bell Operating Companies—

Ameritech Corporation, Bell Atlantic Corporation, BellSouth Corporation,

NYNEX Corporation, Pacific Telesis, Southwestern Bell Corporation, and

US WEST, Inc. By 1999, these seven companies had merged into four: Bell

Atlantic, BellSouth, SBC Communications, and US WEST. 8 Approximately

1,300 independent telephone companies continue to operate, ranging from

small ones with only a few hundred access lines to the largest,

Sprint/United, with millions of access lines. Along with the mergers of

whole companies, smaller realignments are taking place, including the sale

of access lines by one company to another. In general, the major ILECs are

selling access lines to smaller companies. A telephone company that plans

to sell access lines must obtain approval from the appropriate state utility

commission. Additionally, the telephone company must get approval from

FCC to discontinue service.9 Finally, in most cases, an ILEC must apply to

FCC for a waiver when the company plans to sell access lines that will

change the geographic service area of its operations.10

7

By the early 1980s, AT&T had carried roughly 80 percent of the nation’s local telephone

traffic through its 22 subsidiary Bell Operating Companies. The remaining 20 percent of

local telephone traffic (much of which was concentrated in rural areas) was carried by a

myriad of independent telephone companies unaffiliated with AT&T. Because both the Bell

Operating Companies and the independent companies held franchises giving them the right

to serve geographically distinct areas that did not overlap, very few consumers had a choice

of providers for local telephone service.

8

In this report, we provide information on the original seven Regional Bell Operating

Companies, GTE, and Sprint/United, each of which owns more than 2 percent of the access

lines in the United States. In recent years, SBC Communications, the parent of

Southwestern Bell, has acquired Ameritech and Pacific Telesis, along with Southern New

England Telephone Company. Bell Atlantic has acquired NYNEX. FCC approved two new

mergers in June 2000. Bell Atlantic and GTE are now called Verizon. US WEST and Qwest

are now called Qwest.

9

Section 214 of the Communications Act of 1934, as amended, 47 U.S.C. 214.

10In 1984, FCC froze the geographic boundaries where ILECs provide service, known as

study areas. An ILEC must apply to FCC for a waiver when a sale or purchase of access

lines will change the study area boundary.
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The digital age is bringing new business opportunities to local telephone

companies as the volume of data traffic carried over the public telephone

network increases. The rapid growth of the Internet and of electronic

commerce is driving the demand for broadband access that provides a

continuous connection to the Internet, coupled with the capability of both

receiving and transmitting data at high speeds. To capitalize on the demand

for broadband service, telephone companies are taking steps to exploit the

unused carrying capacity of the copper wiring with DSL technology that

connects homes to the telephone companies’ switching centers, so that

broadband signals can be carried along this “last mile” from the switching

center into homes.

Maintaining the quality of telephone service amidst the changes in the

telecommunications marketplace is increasingly important. Telephone

lines provide critical communications connections between electronic

devices that have become integral to how consumers, businesses, and

government send and receive information. As competition develops and

the telecommunications industry becomes a network of networks, it will be

increasingly challenging to maintain seamless, high-quality service. State

utility commissions continue to play a major role in overseeing the quality

of local telephone service within their states. Since the rules on service

quality differ from state to state, telephone companies must comply with

the specific service quality rules for the states in which they operate. At the

federal level, FCC monitors the quality of service as part of its regulatory

responsibilities. While FCC has not established service quality standards

for local telephone companies, it evaluates telephone companies’

performance on the basis of industry standards and an analysis of trends in

service quality data, as reported to FCC by the companies themselves.

These data include companies’ customer complaints and surveys of

customer dissatisfaction.

Most Access Lines Sold

by Major ILECs Are in

Rural Areas

State utility commission staff participating in our nationwide survey

estimate that about 68 percent of the nearly 832,000 access lines sold by the

major ILECs from January 1996 through April 2000 were in rural areas.

More than half of these approximately 562,000 rural access lines were sold

during the first 4 months of 2000. The survey also found that while sales of

access lines by the major ILECs declined steadily from 1997 through 1999,

they surged during the first 4 months of 2000. Although the number of rural

lines sold from January 1996 through April 2000 represented only 2 percent

of the total number of rural access lines that these ILECs owned in 1999,

the upswing in rural line sales appears to be continuing. Two major ILECs
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have plans pending with state utility commissions to sell more than 870,000

additional rural lines.

Access Line Sales Have

Been Concentrated in Rural

Areas

From January 1996 through April 2000, in 31 separate sales, the major

ILECs sold 831,424 access lines in 18 different states; 68 percent of these

lines, or 561,982, were concentrated in rural areas.11 The number of all

access lines per sale ranged from 94 to 242,110. Most of the individual sales

involved relatively small numbers of access lines: an average 2,726 lines per

sale, with 19 out of 31 sales involving 5,000 or fewer lines. As indicated in

figure 1, sales generally involved access lines in the central and mountain

regions of the country.

11 Because we gathered data from state utility commissions, sales listed in this report were

approved by the state utility commissions. However, sales also require FCC approval. A

few recent sales received FCC approval shortly after April 2000 or are pending FCC

approval.
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Figure 1: States Where Major ILECs Sold Access Lines, January 1996-April 2000

Source: GAO’s survey of state utility commissions .

Utility commission staff in 15 of the 18 states where sales occurred

reported in our survey that all of the lines sold in their states were in rural

areas. (See table 1.) The four states with the greatest sales of access lines

were Arkansas, Illinois, Missouri, and Oklahoma. The number of lines sold

in these states accounted for 73 percent of all lines sold and an estimated

61 percent of all rural lines sold.

No access lines sold

Access lines sold
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Table 1: Estimated Access Lines Sold in Rural Areas, January 1996-April 2000

Source: GAO’s survey of state utility commissions. Rural lines sold were estimated from state utility

commission staff estimates of the percent of access lines sold in rural areas.

Sales Increased Sharply

During 2000, After a 3-Year

Decline

As shown in figure 2, the number of access lines sold annually by the major

ILECs decreased from 1997 through 1999, with only one sale (for 94 lines)

occurring during 1999. However, the picture changes dramatically in 2000.

The number of access lines sold from January through April 2000 exceeds

the total number of lines sold from 1996 through 1999. Similarly, the major

ILECs sold more lines in rural areas in the first 4 months of 2000 than the

total number of rural lines they sold from 1996 through 1999. According to

GTE and US WEST officials, their companies made business decisions to

sell access lines at several times in the past. The fluctuations in annual

sales between 1996 and 2000, according to these officials, is attributable to

the time required to obtain state and federal regulatory approvals to effect

States with access

line sales

Total access

lines sold

in rural and

nonrural areas

Estimated percent of

access lines

sold in rural

areas

Estimated

rural access

lines sold

Arkansas 242,110 62% 150,108

Arizona 1,250 100% 1,250

Colorado 94 100% 94

Idaho 14,545 100% 14,545

Iowa 23,573 100% 23,573

Illinois 132,000 0% 0

Kansas 3,015 100% 3,015

Michigan 11,200 100% 11,200

Minnesota 27,743 100% 27,743

Missouri 120,506 100% 120,506

Nebraska 12,497 100% 12,497

North Dakota 17,000 100% 17,000

Oklahoma 116,066 61% 70,626

South Dakota 4,919 100% 4,919

Texas 13,043 100% 13,043

Utah 5,000 100% 5,000

Washington 1,863 100% 1,863

Wisconsin 85,000 100% 85,000

Total 831,424 68% 561,982
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the transfer of the lines to the purchasers. For example, sales for 1996

through 1999 resulted from decisions to sell access lines in 1994, while

sales in 2000 resulted from 1999 decisions to sell additional lines. FCC

disagrees with the notion that the delays associated with state and federal

approvals are responsible for the pattern of sales. According to FCC, the

majority of the delay between a strategic decision to sell lines and final

approval is the result of negotiations between the ILEC and potential

purchaser. FCC estimates that federal approval generally takes no more

than 2 months.

Figure 2: Access Lines Sold by Major ILECs in Rural and Nonrural Areas January

1996—April 2000

a

All sales in 1996 and 1998 were rural.

b

One sale of less than 100 lines.

CIncludes sales from January-April 2000.

Source: GAO’s survey of state utility commissions. Rural sales were estimated by state utility

commission officials.

Number of access lines in thousands

0

100

200

300

400

500

600

1996a 1997 1998a 1999b 2000c

Years

Rural sales

Nonrural sales

Total
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Figure 3 shows the total sales in rural and nonrural areas from January

1996 through April 2000 for the four ILECs.

Figure 3: Rural and Nonrural Access Lines Sold by Major ILECs January 1996—April

2000

Note: Two percent of Sprint/United sales were in rural areas.

Source: GAO’s survey of state utility commissions. Rural sales were estimated by state utility

commission staff.

As indicated in the figure, all of the access lines sold by US WEST and

Ameritech were in rural areas. In addition, nearly three-quarters of the lines

sold by GTE and 2 percent of the lines sold by Sprint/United were in rural

areas. Figure 4 shows, by major ILEC, the estimate of rural access lines

sold from January 1996 through April 2000. Of the estimated rural lines sold

(561,982), GTE and US WEST sold 84 percent (473,967) and accounted for

27 of the 31 sales transactions. Sprint/United conducted three sales and

Ameritech conducted one sale. Our estimates of the remaining rural sales

In thousands

0

100

200

300

400

500

600

US WEST

GTE

Sprint/United

Ameritech

Nonrural sales

Rural sales
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include 3,015 lines sold by Sprint/United in Kansas and 85,000 lines sold by

Ameritech in Wisconsin.

Figure 4: Estimated Rural Access Lines Sold by Major ILECs, January 1996-April

2000

Note: Percents do not add due to rounding.

Source: GAO’s survey of state utility commissions. Rural sales were estimated by state utility

commission staff.

Two Major ILECs Plan to

Sell Additional Access Lines

in Rural Areas

The increase in sales of access lines appears to be continuing. As of April

2000, US WEST and GTE had notified state utility commissions that they

were planning 30 additional sales involving over 1 million access lines,

primarily in rural areas. If approved, these sales would transfer more

access lines than were sold from January 1996 through April 2000. We have

information on 27 pending sales of rural and nonrural access lines; one

state commission could not provide the total number of lines to be sold in

the pending sale; and two state commissions could not distinguish between

rural and nonrural access lines.12 Figure 5 indicates that, as with sales

approved by state utility commissions, most of the states with pending

access line sales are in the central and mountain regions of the country.

19% • US WEST (106,621)

65%

•

GTE (367,346)

0.5%

Sprint (3,015)

15%

•

Ameritech (85,000)
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Figure 5: States With Pending Sales of Access Lines, as of April 2000

Note: Sales are pending in Arizona, Montana, and New Mexico; however, state utility commissions

were unable to provide the total number of lines to be sold.

Source: GAO’s survey of state utility commissions.

More specifically, in the 27 pending sales for which complete information

was available, US WEST and GTE plan to sell a total of 901,379 access lines.

An estimated 97 percent of these lines (871,818 lines) are in rural areas,

according to our survey of state utility commissions. In 24 of these 27 sales,

the commission staff reported that US WEST and GTE plan to sell access

lines exclusively in rural areas. Table 2 provides information on the total

12The Arizona Corporation Commission was unable to provide the total number of lines

pending sale. In Montana and New Mexico, the state utility commissions were able to

provide the total number of lines to be sold but were unable to determine how many of

these lines are in rural areas.

Access line sales pending
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number of rural access lines planned for sale, by state. The number of lines

per pending sale for the 27 sales varies widely, ranging from 169 lines for

one sale in Utah to 313,800 lines for a sale in Texas. In the other three

pending sales for which state utility commission staff provided complete

information in our survey, US WEST and GTE plan to sell access lines in

both rural areas and urban areas. Among these sales, for example, GTE

plans to sell 128,000 lines in Minnesota, 78 percent of which are estimated

to be in rural areas, while US WEST has two sales planned in Wyoming, one

involving 2,336 lines (50 percent estimated to be in rural areas) and the

other involving 4,664 lines (95 percent estimated to be in rural areas).

Table 2: Estimated Percent of Rural Access Lines Involved in Pending Sales

a

Pending sales by state are as follows: Colorado, Idaho, Iowa, Minnesota, South Dakota, Texas, and

Washington each have one; California, Nebraska, Wisconsin, and Wyoming each have two; Alaska

has five; and Utah has seven.

Source: GAO’s survey of state utility commissions. Rural lines sold were estimated from state utility

commission staff estimates of the percent of access lines sold in rural areas.

In addition to involving greater numbers of access lines in total, the

individual sales that US WEST and GTE have pending with state utility

commissions are, on average, larger than the sales that have been approved

by the state utility commissions. Specifically, the average number of lines

States with pending sales of rural

access linesa

Total access lines to be sold

in pending sales

Estimated percent of rural

access lines in pending

sales

Estimated rural access lines

to be sold in pending sales

Alaska 23,796 100% 23,796

California 50,700 100% 50,700

Colorado 36,000 100% 36,000

Idaho 45,000 100% 45,000

Iowa 50,000 100% 50,000

Minnesota 128,000 78% 99,840

Nebraska 74,953 100% 74,953

South Dakota 2,360 100% 2,360

Texas 313,800 100% 313,800

Utah 34,622 100% 34,622

Washington 10,148 100% 10,148

Wisconsin 125,000 100% 125,000

Wyoming 7,000 80% 5,599

Total 901,379 97% 871,818
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to be sold in the pending sales is 11,500, compared with an average of 2,726

lines sold in sales that have been approved by the state utility commissions.

Moreover, while 18 out of 29 of the pending sales (for which we have

complete information on total lines) are for more than 5,000 lines, about

the same number of past sales were for 5,000 or fewer lines. Only two

states (South Dakota and Wyoming) have pending sales of under 10,000

lines, while seven states (California, Iowa, Minnesota, Nebraska, New

Mexico, Wisconsin, and Texas) have sales pending for 50,000 lines or more.

Deployment of “Digital

Subscriber Line”

Technology Has

Increased Substantially

Since Adaptation for

Internet Access

DSL technology was initially developed in the late 1980s and tested in the

early 1990s as a means for providing video services over the telephone

network. In the mid-1990s, as the Internet began to surge in popularity,

technical trials were conducted by several telephone companies to test the

asymmetric form of DSL (ADSL) to provide high-speed Internet access.

Although the commercial deployment of ADSL technology did not begin for

nearly 10 years after its development, telephone companies’ deployment of

ADSL for residential high-speed Internet access has grown substantially

since late 1997 when it was first deployed. According to a number of

communications industry officials and some industry experts, ILECs did

not deploy ADSL sooner because of concern that the technology could

harm existing high-speed telephone services. ADSL deployment by ILECs

increased in recent years, we were told, in response to ADSL deployment

rates of CLECs and the cable industry’s deployment of cable modem

Internet service. Representatives of several ILECs contend that ADSL was

not deployed sooner because the trials of the technology for video ondemand service were unsuccessful, the technology had technical

limitations, and federal regulations were issued for DSL service.

DSL Supports High-Speed

Broadband Services Over

Existing Telephone Lines

DSL is the generic name for a communications technology that supports

the transmission of high-speed broadband services over telephone

companies’ existing local loops—the twisted pair of copper wires

connected from virtually every home and business in the nation to the

public switched telephone network. One version of the technology, ADSL,

provides faster speeds for downloads than uploads and has become the

most widely deployed form of DSL technology by the nation’s telephone

companies for the provision of high-speed Internet access. This technology

facilitates the transmission of data signals over the high-frequency portion

of the loop in their original form, bypassing the public network, and routing

the signals between a user’s computer and the Internet. Without DSL

service, data signals must be converted by a modem for transmission over
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copper loops and reconverted back to their original form at their

destination point. Because different portions of copper loops’ bandwidth

are engaged in transmitting voice and data signals, both can be transmitted

simultaneously with DSL technology, thereby enabling a DSL customer to

talk on the telephone and use the Internet at the same time.

Originally Conceived for

Video Services, DSL

Technology Was Adapted for

Internet Access

Efforts to maximize the existing copper loop infrastructure of the

telephone network for the transmission of video and other services

requiring greater bandwidth began in the late 1980s. Bell Communications

Research (Bellcore),13 the former research and engineering consortium of

the Regional Bell Operating Companies, is largely credited with the initial

research on DSL. Overcoming a general belief that the telephone

companies’ local copper loops had limited capacity, Bellcore researchers

demonstrated that the bandwidth available on the loops was not fully

utilized for voice services and that the transmission capacity was

significantly higher than estimated earlier. Because voice signals only

utilize a small portion at the lowest frequency of the available bandwidth

on local loops, DSL technology was developed to exploit the unused highfrequency portion of copper loops to transport data signals at high speeds.

Figure 6 shows the timeline of DSL development.

13In 1997, Bellcore was sold by the Regional Bell Operating Companies to Science

Applications International Corporation and was renamed Telcordia Technologies.
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Page 19 GAO/RCED-00-237 Local Telephone Service

Figure 6: Timeline of DSL Development Activities

Research on DSL continued into the early 1990s to improve the technology

and its ability to support the delivery of broadband services to telephone

customers. Several techniques were developed by private sector and

academic researchers to code, or modulate, data signals that are

transmitted over local loops using DSL technology in order to provide an

“asymmetrical” capability—that is, a higher speed for downloading data

using greater bandwidth and slower speeds using less bandwidth for

uploading data—considered key to delivering video. A division within the

DSL developer community over the competing modulation techniques

resulted in the formation of the ADSL Forum in 1994, which brought the

DSL industry together to support further research, development, and

deployment of DSL technology. The most widely deployed form of DSL

technology today, ADSL was considered practical for video services and

later for Internet access because it mimics typical customer usage patterns

of substantial download and minimum upload activities.

a

Now known as DSL Forum

b

Includes deployment of all but one form of DSL technology

Late 1980s 1993 1994 1995 1996 1997 Year end 1999 1992 Year end 1998

Bellcore demonstrates DSL capabilityBell Atlantic announces ADSL plans for 

video on-demand

Bell Atlantic launches first ADSL video 

on-demand trial; ADSL standard adopted in U.S.

ADSL Forum establishedaBell Atlantic begins second ADSL/video 

on-demand trial; Internet usage surges

ADSL/Internet access trials begin; Congress 

passes Telecommunications Act of 1996

Cable companies launch

cable modem service

Competitive telephone

companies begin

ADSL deployments

US WEST launches first commerical 

ADSL deployment

39,000 DSL lines in serviceb504,110 DSL lines

in serviceb
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In October 1992, Bell Atlantic announced plans to test a video on-demand

service using ADSL-equipped telephone lines to transmit video by

customers’ request. When the 2-year trial was launched in April 1993 with

the participation of 300 employees, Bell Atlantic became the first known

company in the world to deploy ADSL technology outside a laboratory. In a

second phase, begun in May 1995, Bell Atlantic tested video on-demand

over ADSL technology under field conditions with actual customers. At the

conclusion of this commercial trial, Bell Atlantic announced plans to

deploy ADSL for on-demand broadband services in selected markets

beginning in 1997.14

By the mid-1990s, the popularity of the Internet surged because the

graphical nature of the World Wide Web greatly improved public access to

the Internet. In addition, alternative methods for Internet access—such as

cable modem service—became available to consumers, and the ILECs

began to face competition for both conventional local telephone and DSL

services, in part because of the enactment of the Telecommunications Act

of 1996. Upon realizing at this time that new media services would become

more widely available through the Internet over a personal computer than

over television sets, ILECs’ efforts to bring ADSL technology to

commercialization were redirected to capitalize on the growing demand for

Internet access and services based on the World Wide Web. ADSL field

trials conducted by other telecommunications companies in the mid-1990s

were designed to test the technology for providing broadband Internet

access. For example, GTE began an Internet access trial using 30 ADSLequipped lines in Irving, Texas, in February 1996, and conducted a second

trial in partnership with Microsoft in Redmond, Washington, 2 months later.

Other known ADSL trials for Internet access were conducted in 1996 by

Ameritech, NYNEX, Pacific Telesis, SBC Communications, and US WEST.

US WEST in Phoenix, Arizona, made the first known commercial offering

of ADSL service for Internet access in late 1997. Ameritech, GTE, and SBC

soon followed with commercial deployments of ADSL service in late 1997

and 1998. As CLECs began to gain access to incumbent carriers’ networks

and facilities, as permitted by the Telecommunications Act of 1996, DSL

14 In anticipation of the commercialization of video on-demand, three of the Regional Bell

Operating Companies—Bell Atlantic, NYNEX, and Pacific Telesis—established a

partnership known as “TELE-TV” in October 1994 to provide a nationally branded package

of entertainment, information, and educational services. A similar company, known as

“Americast,” was formed by Ameritech, BellSouth, Southwestern Bell, GTE, Southern New

England Telephone Company, and the Disney Company.
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Page 21 GAO/RCED-00-237 Local Telephone Service

service also began to be rolled out to CLECs’ customers. For example,

Covad Communications launched ADSL service in December 1997 in the

San Francisco Bay area; ICG Communications launched ADSL service to

customers in areas of California, Colorado, Ohio, and parts of the

southeastern United States in March 1998. Market research data show that

by the end of 1998, 39,000 DSL lines were deployed across the country. One

year later, at the end of 1999, the number of DSL lines in service was

estimated at 504,110. The most recent data available from industry experts

indicate that at the end of the second quarter of 2000, 1,204,478 DSL lines

were in service. On the basis of recent trends, industry experts estimate

that DSL deployment will reach over 2 million in-service lines by the end of

2000.

Failure of Video On-Demand

and Other Factors Affected

DSL Deployment

Although DSL service has held the promise for several years of

transforming the telephone companies’ copper loops into high-speed

connections delivering broadband services, there are concerns that the

technology has not been rolled out by the Regional Bell Operating

Companies and other ILECs as rapidly as possible. For example, the 1999

Economic Report of the President noted that, despite the availability of

DSL technology since the 1980s, local telephone companies have only

recently begun to offer DSL service to business and residential customers.

According to a number of communications industry officials and some

industry experts we spoke with, the recent rapid deployment of DSL by the

ILECs has occurred primarily to compete for high-speed Internet access

with CLECs, which have aggressively rolled out DSL, and with cable

companies deploying broadband cable modem service. Although DSL was

first conceived as a means to enter the video market and compete with

cable companies, the ILECs’ interest in the technology diminished until

they feared that competitors would use the technology to force their way

into the local telephone market, according to some industry officials and

experts. In addition, some industry analysts we spoke with indicated that

the ILECs began to understand they had no choice but to test-market and

deploy DSL more quickly or risk losing market share of the broadband

Internet services market to cable companies.

Numerous reasons were offered by some communications industry

officials and experts whom we spoke with for the ILECs’ initial slow

deployment of DSL service. Most frequently cited was a concern among the

ILECs that DSL might negatively affect the revenues generated by other

high-speed services offered by these companies. In addition to the effects
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Page 22 GAO/RCED-00-237 Local Telephone Service

on other services, we were told that it takes a long time for new technology

to be deployed by the telephone industry. One industry analyst told us that

telephone companies are more risk-averse than other market participants,

such as the cable companies, and are less likely to roll out an unproven

technology.

By contrast, officials of several ILECs and others told us that DSL was not

rolled out sooner largely because the original application for which it was

intended—video on-demand—was not successful in field trials. We were

also told that (1) the standards for DSL were not promulgated quickly

enough, (2) public demand for broadband services did not arise until

recently, and (3) there were and continue to be many technical limitations

of DSL technology. These limitations include the following: DSL service can

only be provided to customers who reside at a distance of no greater than

18,000 feet from a telephone company’s central office;15 the customers’

telephone lines must be in good enough physical condition to support the

service; and the telephone companies have had to address the issue of the

compatibility of DSL technology used on copper loops with fiber optic

cable deployed from central offices to remote facilities placed in

neighborhoods. Finally, we were told that the regulation of DSL technology

under provisions of the 1996 Telecommunications Act serves as a

disincentive to its more rapid deployment by the ILECs.

Telephone Service

Quality Indicators

Raise Concerns

We reviewed two key indicators that raise concerns about the quality of

telephone service. One of the indicators is customer complaints filed with

state and federal regulators. Following a decline in the number of

complaints per 1,000 access lines from 1996 to 1997, we found a steady

increase in complaint levels between 1997 and 1999. The other indicator is

telephone companies’ own survey data on customer dissatisfaction with

the quality of a variety of telephone services. We found that the changes in

customer dissatisfaction levels from 1996 to 1999 varied considerably from

company to company, depending on type of customer (residential, small

business, and large business) and the type of service. Although no overall

trend is evident for the entire 1996-99 period, the data do indicate that

customers of most major ILECs were more dissatisfied with their

telephone service in 1999 than they were in 1998.

15Although the distance limitation of DSL is acknowledged in FCC documents, some

industry officials and experts with whom we spoke disputed the limitation.
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Page 23 GAO/RCED-00-237 Local Telephone Service

Level of Customer

Complaints to State and

Federal Regulators Is

Increasing

The telephone industry has developed and widely uses service quality

indicators to track the quality of key telephone services. The telephone

companies are required to report data on these service quality indicators to

FCC, which maintains the information in its Automated Reporting

Management Information System (ARMIS) 16 and produces an annual

report on telephone service quality.17 The ARMIS service quality data are

self-reported by the major ILECs and are not verified by FCC.

One of the key indicators tracked in the ARMIS database is the number of

customer complaints filed with state utility commissions and FCC about

service problems. These customer complaints concern service quality

issues only and exclude complaints about billing, operator service

providers, and information services provided by other companies (such as

900 or 976 services used to hear sports scores and stock quotes). We

calculated the number of complaints per 1,000 access lines for eight of the

major ILECs. Because some major ILECs are larger than others, we

calculated the number of complaints per 1,000 lines to provide a

comparable measure across the companies. We excluded NYNEX from our

analysis because of a change in the company’s data reporting methodology,

which would have caused inconsistent data to be used for comparison.

FCC officials agreed that NYNEX data should not be included in our

analysis of complaint data.

As indicated in figure 7, the level of customer complaints per 1,000 access

lines filed with state and federal regulators against the major ILECs has

increased overall since 1996. Following a modest decrease from 1996 to

1997, the complaint level increased to a point significantly higher in 1999

than in 1996.

16The service quality indicators that the telephone companies report on are switch outages

and downtime, trunk blockages, installation and repair intervals, customer complaints, and

customer survey data.

17Sprint/United is not required to submit an ARMIS report on customer satisfaction.
B-285105

Page 24 GAO/RCED-00-237 Local Telephone Service

Figure 7: Complaints per 1,000 Access Lines for Major ILECs, 1996-99

Note: These data include Ameritech, Bell Atlantic, BellSouth, US WEST, Sprint/United, Southwestern

Bell, Pacific Telesis, and GTE. They exclude NYNEX, which changed in how it reports data during this

period.

Source: GAO’s analysis of FCC’s data.

Figure 8 provides a breakdown of the overall customer complaint levels per

1,000 access lines for each of the eight major ILECs. The overall increase

between 1996 and 1999 is attributable to higher complaint levels for five of

the eight major ILECs included in our analysis for this service quality

indicator: Ameritech, Bell Atlantic, BellSouth, US WEST, and

Sprint/United.18 Two companies’ complaint levels remained relatively

unchanged during this period—Southwestern Bell and Pacific Telesis,

while GTE’s complaint levels declined. Concerning the relative number of

complaints per 1,000 access lines across the major ILECs in 1999, as

reported by the companies themselves, Southwestern Bell and Pacific

Telesis are the lowest, while US WEST is the highest.19

18We are reporting telephone company data as reported to FCC. Telephone companies are

continuing to report data to FCC in an unconsolidated form, even though many companies

are now merged.

Complaints per 1,000 access lines

0

50

100

150

200

250

300

1996 1997 1998 1999

Years
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Page 25 GAO/RCED-00-237 Local Telephone Service

Figure 8: Total Customer Complaints Per 1,000 Lines, 1996-99

Source: GAO’s analysis of FCC’s data.

For the ILECs we examined, we found no difference in the level of

complaints for both urban and rural customers. That is to say, Ameritech,

Bell Atlantic, BellSouth, Pacific Telesis, US WEST, and Sprint/United had

more complaints per 1,000 access lines among both urban and rural

customers in 1999 than in 1996; Southwestern Bell’s complaint levels

remained relatively unchanged among both urban and rural customers

19To access the accuracy of the Pacific Telesis and Southwestern Bell data, FCC contacted

six state utility commissions in the territories that these companies serve. Five of six

reported a greater number of complaints received about the companies than the companies

reported in their ARMIS filings for 1999.

Total customer complaints per 1,000 lines

0

.1

.2

.3

.4

.5

.6

.7

.8

.9

1996

1997

1998

1999

Major ILEC

Ameritech

Bell Atlantic

BellSouth

GTE

Pacific Telesis

Southwestern Bell

US WEST

Sprint/United
B-285105

Page 26 GAO/RCED-00-237 Local Telephone Service

between 1996 and 1999; and GTE’s complaint levels declined among both

urban and rural customers between 1996 and 1999.

Although we did not find differences between urban and rural complaint

levels, we did find that residential customers appear to be experiencing a

higher level of service problems than business customers. From 1996

through 1999, all of the major ILECs had more complaints per 1,000 access

lines filed against them by residential customers than by business

customers.20 The complaint levels can be the result of several factors,

including customers’ distance from the central office. Figure 9 shows the

level of complaints for business and residential customers in 1999.

20The complaint results are consistent with the data that we found on companies’ trouble

reports, which are also filed with FCC. Since there are more residential consumers than

business consumers, presumably there would be more residential complaints. To normalize

the complaint data for purposes of comparing residential and business customer compliant

levels, we calculated the number of residential customer complaints per 1,000 residential

access lines and the number of business customer complaints per 1,000 business access

lines.
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Page 27 GAO/RCED-00-237 Local Telephone Service

Figure 9: Business Versus Residential Customer Complaints, 1999

Source: GAO’s analysis of FCC’s data.

Changes in the number of residential and business complaints from 1996

through 1999 were generally similar to changes seen in each company’s

total level of complaints. Namely, Ameritech, Bell Atlantic, BellSouth, US

WEST, and Sprint/United had more residential and business customer

complaints per 1,000 access lines in 1999 than in 1996. Southwestern Bell’s

residential and business customer complaints per 1,000 lines stayed about

the same while GTE’s declined. The only anomaly was Pacific Telesis; its

level of complaints from business customers was about the same for 1996

through 1999, while complaints from residential customers increased. FCC

officials told us they are concerned about the increasing level of

complaints, especially since most of the customers are residential.

Complaints per 1,000 lines

0

0.2

0.4

0.6

0.8

1

1.2

Ameritech

Bell Atlantic

BellSouth

GTE

Pacific Telesis

Southwestern Bell

US WEST

Sprint/United

Business

Residential
B-285105

Page 28 GAO/RCED-00-237 Local Telephone Service

Customer Dissatisfaction

Survey Data Vary by

Company, Type of

Customer, and Type of

Service

A second key indicator tracked by FCC are survey data on customer

dissatisfaction. Most major ILECs design and conduct annual surveys to

determine how dissatisfied their customers are with various aspects of

their service and then report the results of these surveys to FCC. In FCC’s

annual report on service quality, the percentage of dissatisfied customers is

reported by company for three types of customers—residential, small

business, and large business—and for three types of services—

installations, repairs, and business office services.21 As with other ARMIS

service quality data, the customer satisfaction data are self-reported by the

telephone companies and not verified by FCC.

In contrast to customer complaints, the ARMIS data for 1996 to 1999 show

no consistent trend in the level of customer dissatisfaction across the

major ILECs, the three types of customers, or the three types of services we

examined. Rather, there is much variation in the levels of dissatisfaction,

depending on the company, the type of customer, and the type of service.

For example, the residential customers of Ameritech, BellSouth, and

Pacific Telesis were more dissatisfied with all three types of services—

installation, repair, and business office—in 1999 than in 1996. In contrast,

Bell Atlantic and NYNEX residential customers were less dissatisfied with

these three types of services in 1999 than in 1996. There was no consistent

pattern of change for the residential customers of the remaining three

companies. The patterns for small business and large business customers

were even more varied. However, if we narrow the time frame and compare

1999 data with 1998 data, we find that customers for most ILECs generally

expressed more dissatisfaction with all types of services. FCC officials

have told us they are concerned about this recent general increase in

dissatisfaction. Appendix II provides detailed information on customer

dissatisfaction levels for 1996 through 1999 by company, type of customer,

and type of service.

Agency Comments We provided a draft of this report to the Federal Communications

Commission for review and comment and subsequently spoke with the

Chief of the FCC’s Accounting Safeguards Division. The agency concurred

21The categories for type of customer and type of service are defined and interpreted by

each reporting carrier because each carrier’s survey can be different. Thus, strict

comparisons on the level of customer dissatisfaction between carriers will not be precise.
B-285105

Page 29 GAO/RCED-00-237 Local Telephone Service

with our findings and provided several points of clarification, which we

incorporated into our final report.

We are sending copies of this report to interested congressional

committees; the Chairman, Commissioners, and Managing Director, FCC;

the Director, OMB; and other interested parties. We will also make copies

available to others upon request.

If you or your staff have any questions about this report, please call me on

(202) 512-7631. Key contributors to this report are listed in appendix III.

Sincerely yours,

Stanley J. Czerwinski

Associate Director, Housing, Community Development,

and Telecommunications Issues
Page 30 GAO/RCED-00-237 Local Telephone Service

Appendix I

Scope and Methodology ApApenednxidexiIs

We reviewed Federal Communications Commission (FCC) data to identify

cases in which major incumbent local exchange carriers, known as ILECs,

had sought the Commission’s approval for changes in the geographical

boundaries of their operations in connection with sales of access lines

since 1996. We also mailed surveys to staff at the state utility commissions

in all 50 states and the District of Columbia. The surveys included

information on the sales of access lines obtained from FCC and asked the

state utility commission staff to verify this information. Thus, respondents

provided the number of access lines sold in each sale. In reporting the

average number of lines sold in sales that have already occurred and in

pending sales, we used the median to represent the average. The median is

the midpoint in a range of numbers. The survey also requested information

on any other sales or pending sales of access lines. Respondents estimated

the percentage of access lines that were in rural areas—areas outside

metropolitan statistical areas—for (1) actual sales and (2) pending sales.

We received survey responses from all 51 state utility commissions.

To describe the development of digital subscriber line (DSL) technology

and the basis for variations in its rate of deployment, we reviewed FCC

publications and public sources for documentation and information on DSL

technology. In addition, we talked with industry officials—including

representatives of telephone companies (e.g., Bell Atlantic, GTE, SBC, and

US WEST); cable companies; and other communications companies—and

industry experts to identify trends in how DSL technology is being

deployed.

To identify service quality issues associated with the large incumbent local

telephone companies, we interviewed FCC staff and reviewed FCC and

public reports on service quality. In addition, we analyzed service quality

information in FCC’s Automated Reporting Management Information

System (ARMIS) database. This information is supplied to FCC by the large

telephone companies.1 Because FCC does not audit the service quality

data, these data may contain errors that cannot be determined at this time.

Also, carriers periodically revise submitted data as problems are

discovered and, therefore, the data used for this report may not contain the

latest available data on file. Furthermore, caution is needed when analyzing

some of the service quality data indicators because different companies

1

These data are from telephone carriers that are required to file because they are either a

"price cap carrier" or because their annual revenues exceed $114 million. A "price cap

carrier" is a telephone company whose prices are regulated or "capped."
Appendix I

Scope and Methodology

Page 31 GAO/RCED-00-237 Local Telephone Service

may view what is included in a category differently. For example, services

that one company considers installation, repair, or business office services

may be viewed differently by another company. Finally, because

performance within any single category may vary over time, using only a

single indicator category may be misleading. We also reviewed other

service quality data supplied to FCC by the large telephone companies as

required by law or by merger agreements.

We performed our review from March through August 2000 in accordance

with generally accepted government auditing standards.
Page 32 GAO/RCED-00-237 Local Telephone Service

Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999 ApendxiI

Reporting ILECs are required to provide data to FCC on the percent of

residential, small business, and large business customers dissatisfied with

installation, repair, and business office services and procedures.

Tables 3 through 11 show the eight major ILEC’s performance for 1996

through 1999 (the most recent data) for each type of customer and types of

service. The tables provide the underlying percentage data used to create

the figures that follow them. As the tables and figures indicate, companies

varied considerably in the changes in level of dissatisfaction between 1996

and 1999 in each of the categories. We highlight instances where individual

ILECs show a clear trend of increasing levels of customer dissatisfaction

over the period.
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 33 GAO/RCED-00-237 Local Telephone Service

Residential Customers’

Dissatisfaction With

Installation Services

Table 3 and figure 10 provide information on residential customer

dissatisfaction with installation services over the 1996 to 1999 period.

Ameritech, BellSouth, and Pacific Telesis residential customers were

increasingly dissatisfied during this period.

Table 3: Percent of Residential Customers Dissatisfied With Installation Services,

1996-99

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 3.5 5.4 7.6 7.7

Bell Atlantic 8.5 3.1 3.9 5.7

BellSouth 5.2 5.7 6.8 9.2

GTE 7.5 7.8 7.4 7.4

NYNEX 14.1 11.5 4.4 5.1

Pacific Telesis 3.1 4.2 7.2 10.8

Southwestern Bell 5.8 5.5 5.0 5.7

US WEST 9.5 4.9 4.9 7.3
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 34 GAO/RCED-00-237 Local Telephone Service

Figure 10: Percent of Residential Customers Dissatisfied With Installation Services, 1996-99

Source: GAO’s analysis of FCC’s data.

Percent dissatisfied

0

5

10

15

Major ILEC

1996

1997

1998

1999

Ameritech

Bell Atlantic

BellSouth

GTE

Pacific Telesis

Southwestern Bell

US WEST

NYNEX
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 35 GAO/RCED-00-237 Local Telephone Service

Residential Customers’

Dissatisfaction With Repair

Services

Table 4 and figure 11 illustrate the trend in residential customer

dissatisfaction with repair services for 1996 through 1999. Ameritech,

BellSouth, Pacific Telesis, and US WEST customers became more

dissatisfied during this period.

Table 4: Percent of Residential Customers Dissatisfied With Repair Services,

1996-99

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 9.1 10.4 12.4 15.4

Bell Atlantic 21.1 8.3 12.3 15.8

BellSouth 8.7 8.5 10.2 15.1

GTE 12.8 11.8 11.0 11.6

NYNEX 27.3 21.4 12.7 13.9

Pacific Telesis 7.4 10.6 15.6 15.8

Southwestern Bell 8.4 8.0 7.6 7.9

US WEST 10.6 7.1 8.3 13.9
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 36 GAO/RCED-00-237 Local Telephone Service

Figure 11: Percent of Residential Customers Dissatisfied With Repair Services, 1996-99

Source: GAO’s analysis of FCC’s data.

0

5

10

15

20

25

30

Ameritech

Bell Atlantic

BellSouth

GTE

NYNEX

Pacific Telesis

US WEST

Major ILEC

1996

1997

1998

1999

Percent dissatisfied

Southwestern Bell
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 37 GAO/RCED-00-237 Local Telephone Service

Residential Customers’

Dissatisfaction With

Business Office Services

Table 5 and figure 12 provide information on residential customers’

dissatisfaction with business office services. Ameritech, BellSouth, and

Pacific Telesis residential customers generally became more dissatisfied

during 1996 through 1999.

Table 5: Percent of Residential Customers Dissatisfied With Business Office

Services, 1996-99

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 5.9 8.4 8.9 8.6

Bell Atlantic 11.4 3.5 5.4 5.7

BellSouth 5.2 6.1 7.6 8.4

GTE 2.1 2.2 2.1 1.8

NYNEX 18.9 14.0 6.8 7.4

Pacific Telesis 2.1 2.7 6.8 9.6

Southwestern Bell 7.1 6.6 6.3 6.5

US WEST 2.2 2.1 2.2 2.9
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 38 GAO/RCED-00-237 Local Telephone Service

Figure 12: Percent of Residential Customers Dissatisfied With Business Office Services, 1996-99

Source: GAO’s analysis of FCC’s data.

Percent dissatisfied

0

5

10

15

20

Major ILEC

1996

1997

1998

1999

Ameritech

Bell Atlantic

BellSouth

GTE

Pacific Telesis

Southwestern Bell

US WEST

NYNEX
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 39 GAO/RCED-00-237 Local Telephone Service

Small Business Customers’

Dissatisfaction With

Installation Services

Table 6 and figure 13 illustrate small businesses’ dissatisfaction with

installation services. With the exception of GTE, NYNEX, and

Southwestern Bell, all companies report generally increasing levels of

dissatisfaction for 1996 through 1999.

Table 6: Percent of Small Business Customers Dissatisfied With Installation

Services, 1996-99

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 8.9 10.3 10.9 11.4

Bell Atlantic 6.5 7.8 7.1 8.6

BellSouth 3.5 5.8 7.2 8.2

GTE 14.2 14.0 13.1 12.5

NYNEX 20.5 17.1 8.1 9.5

Pacific Telesis 4.5 6.2 9.9 11.2

Southwestern Bell 6.9 6.3 6.4 7.4

US WEST 11.6 12.0 12.8 17.2
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 40 GAO/RCED-00-237 Local Telephone Service

Figure 13: Percent of Small Business Customers Dissatisfied With Installation Services, 1996-99

Source: GAO’s analysis of FCC’s data.

0

5

10

15

20

25

Ameritech

Bell Atlantic

BellSouth

GTE

NYNEX

Pacific Telesis

Southwestern Bell

US WEST

Major ILEC

1996

1997

1998

1999

Percent dissatisfied
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 41 GAO/RCED-00-237 Local Telephone Service

Small Business Customers’

Dissatisfaction With Repair

Services

Table 7 and figure 14 provide information on small business customers’

dissatisfaction with repair services. Ameritech, Bell Atlantic, BellSouth,

Pacific Telesis, and US WEST small business customers became more

dissatisfied between 1996 and 1999.

Table 7: Percent of Small Business Customers Dissatisfied With Repair Services,

1996-99

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 11.8 11.9 11.9 14.1

Bell Atlantic 9.5 10.3 10.5 13.0

BellSouth 4.3 7.4 8.3 10.7

GTE 13.9 13.8 12.5 12.0

NYNEX 23.4 20.2 11.4 10.8

Pacific Telesis 7.6 8.7 9.7 11.8

Southwestern Bell 6.6 5.8 6.0 6.0

US WEST 12.9 8.0 9.4 17.6
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 42 GAO/RCED-00-237 Local Telephone Service

Figure 14: Percent of Small Business Customers Dissatisfied With Repair Services, 1996-99

Percent dissatisfied

0

5

10

15

20

25

Major ILEC

1996

1997

1998

1999

Ameritech

Bell Atlantic

BellSouth

GTE

Pacific Telesis

Southwestern Bell

US WEST

NYNEX
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 43 GAO/RCED-00-237 Local Telephone Service

Source: GAO’s analysis of FCC’s data.

Small Business Customers’

Dissatisfaction With

Business Office Services

Table 8 and figure 15 illustrate the trend in small businesses’ dissatisfaction

with business office services. With the exception of GTE, NYNEX, and

Southwestern Bell, all companies report generally increasing levels of

dissatisfaction for 1996 through 1999.

Table 8: Percent of Small Business Customers Dissatisfied With Business Office

Services, 1996-99

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 6.3 8.5 9.6 14.4

Bell Atlantic 5.9 6.2 9.5 9.9

BellSouth 2.3 6.2 8.0 10.6

GTE 4.6 5.6 4.8 3.5

NYNEX 15.9 14.5 8.1 8.3

Pacific Telesis 4.0 5.0 9.4 10.5

Southwestern Bell 6.6 5.9 5.8 7.4

US WEST 3.6 4.4 5.2 7.1
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 44 GAO/RCED-00-237 Local Telephone Service

Figure 15: Percent of Small Business Customers Dissatisfied With Business Office Services, 1996-99

Source: GAO’s analysis of FCC’s data.

Percent dissatisfied

0

5

10

15

20

25

Major ILEC

1996

1997

1998

1999

Ameritech

Bell Atlantic

BellSouth

GTE

Pacific Telesis

Southwestern Bell

US WEST

NYNEX
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 45 GAO/RCED-00-237 Local Telephone Service

Large Business Customers’

Dissatisfaction With

Installation Services

Table 9 and figure 16 illustrate the trend in large business customers’

dissatisfaction with installation services for 1996 through 1999. Two

companies show an increase (BellSouth and Pacific Telesis). Ameritech

data for 1999 were not available.

Table 9: Percent of Large Business Customers Dissatisfied With Installation

Services, 1996-99

a

Ameritech has not submitted these data.

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 9.4 10.3 10.8 a

Bell Atlantic 11.3 9.3 11.0 10.3

BellSouth 5.0 4.5 3.8 6.1

GTE 1.2 6.4 4.1 3.0

NYNEX 23.4 16.9 7.9 7.2

Pacific Telesis 7.4 7.8 8.3 17.1

Southwestern Bell 11.2 11.9 6.3 7.4

US WEST 23.0 18.0 14.0 19.7
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 46 GAO/RCED-00-237 Local Telephone Service

Figure 16: Percent of Large Business Customers Dissatisfied With Installation Services, 1996-99

Note: Ameritech data for 1999 were not available.

Source: GAO’s analysis of FCC’s data.

Ameritech

Bell Atlantic

0

5

10

15

20

25

Major ILEC

1996

1997

1998

1999

Percent dissatisfied

BellSouth

GTE

NYNEX

US WEST

Pacific Telesis

Southwestern Bell
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 47 GAO/RCED-00-237 Local Telephone Service

Large Business Customers’

Dissatisfaction With Repair

Services

Table 10 and figure 17 illustrate the level of large business customers’

dissatisfaction with repair services. BellSouth, GTE, and Pacific Telesis

large business customers became more dissatisfied. Ameritech data for

1999 were not available.

Table 10: Percent of Large Business Customers Dissatisfied With Repair Services,

1996-99

a

Ameritech has not submitted this data.

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 11.8 15.8 12.6 a

Bell Atlantic 13.2 9.0 14.6 13.0

BellSouth 5.7 5.6 5.4 6.7

GTE 1.3 6.8 2.5 2.5

NYNEX 30.1 20.2 13.3 10.0

Pacific Telesis 7.9 9.6 9.6 19.5

Southwestern Bell 8.0 8.1 8.0 8.1

US WEST 22.0 16.0 16.0 22.2
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 48 GAO/RCED-00-237 Local Telephone Service

Figure 17: Percent of Large Business Customers Dissatisfied With Repair Services, 1996-99

Note: Ameritech data for 1999 were not available.

Source: GAO’s analysis of FCC’s data.

Percent dissatisfied

0

5

10

15

20

25

30

35

1996

1997

1998

1999

Major ILEC

Ameritech

Bell Atlantic

BellSouth

GTE

Pacific Telesis

Southwestern Bell

US WEST

NYNEX
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 49 GAO/RCED-00-237 Local Telephone Service

Large Business Customers’

Dissatisfaction With

Business Office Services

Table 11 and figure 18 provide information on large business dissatisfaction

with business office services. Bell Atlantic, BellSouth, Pacific Telesis, and

US WEST large business customers became more dissatisfied with

business office services for 1996 through 1999.

Table 11: Percent of Large Business Customers Dissatisfied With Business Office

Services, 1996-99

Source: GAO’s analysis of FCC’s data.

Company 1996 1997 1998 1999

Ameritech 13.4 9.5 9.3 5.2

Bell Atlantic 9.8 5.8 11.6 10.8

BellSouth 3.5 4.2 4.3 6.5

GTE 0.3 0.0 1.5 1.1

NYNEX 12.5 18.2 8.2 7.6

Pacific Telesis 2.7 7.1 7.7 15.1

Southwestern Bell 13.8 15.5 5.3 5.6

US WEST 9.0 16.0 18.0 18.1
Appendix II

Trends for Percent of Customers Dissatisfied,

1996 and 1999

Page 50 GAO/RCED-00-237 Local Telephone Service

Figure 18: Percent of Large Business Customers Dissatisfied With Business Office Services, 1996-99

Source: GAO’s analysis of FCC’s data.

Percent dissatisfied

0

5

10

15

20

Major ILEC

1996

1997

1998

1999

Ameritech

Bell Atlantic

BellSouth

GTE

Pacific Telesis

Southwestern Bell

US WEST

NYNEX
Page 51 GAO/RCED-00-237 Local Telephone Service

Appendix III

GAO Contacts and Staff Acknowledgements ApendxiI

GAO Contacts Stanley J. Czerwinski (202) 512-7631

John Finedore (202) 512-7631

Acknowledgements In addition to those named above, Dennis Amari, Michael Clements, Sally

Coburn, Fran Featherston, Donna Lucas, and Joan Mahagan made key

contributions to this report.

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