Before the Federal Communications Commission Washington, D.C. 20554
Submitted By
Tom Allibone, Director, TeleTruth Auditing Division, President of LTC Consulting Bruce Kushnick, Chairman, TeleTruth, Executive Director New Networks Institute C/O New Networks Institute 826 Broadway, Suite 900 New York, NY. 10003 212-777-5418
January 14th, 2002
TeleTruth is a national, independent, broad-based coalition of telecom and broadband residential and business customers, small businesses and large corporations, industry experts and consultants, lawyers, Internet Providers and telco competitors. The organization was created to defend the public interests in telecommunication and broadband issues, educate and inform the public to combat monopoly control of critical telecommunications infrastructure, promote fairness, innovation and competition and accelerate (encourage) the deployment of advanced networks and new forms of communications. Tom Allibone is the Director of TeleTruth's Auditing Division, Chairman of the New Jersey TeleTruth chapter and president of LTC Consulting, a telecommunications firm that specializes in auditing phone bills for retail and wholesale customers (such as Competitive Local Exchange companies (CLEC). The company's telephone bill audit service provides a systematic review of all telephone carrier charges and customer service records, including the identification and inspection of billed services and equipment. When discrepancies arise between the services and equipment rendered and billed, a claim is presented to the carrier and a settlement is negotiated. Since 1989, LTC has audited the telecommunications services and bills rendered to hundreds of New Jersey small businesses and discovered over $10 million in hidden overcharges. Bruce Kushnick, is Chairman of TeleTruth and Executive Director of New Networks Institute, a market research and consulting firm focusing on telecom and broadband issues for the public interest. In 1992 New Networks Institute, (NNI) was created to investigate, on a totally independent impartial basis, how the break-up of AT&T and the creation of Baby Bells had impacted subscribers. Since that time the Institute has completed the most comprehensive research project ever undertaken, (published by Probe research and Phillips Business Information) helped to initiate Class Action suits in specific states, has filed comments and complaints with the FCC, IRS, and other government agencies in the hopes of creating change that benefit the telephone customer. In 2001, New Networks Institute and TeleTruth associates proposed a new piece of Federal legislation --- the "Broadband Bill of Rights". New Networks is independently funded through research and consulting projects and the sales of books and research reports and surveys. TeleTruth and its members consider this application by Verizon to offer Long Distance in New Jersey to be, at best, premature and the FCC should reject it at this time. First, TeleTruth's primary finding is that the Billing (OSS) services by the Bell company for its retail customers as well as the wholesale customers, including Competitive Local Exchange Companies (CLECs) and Internet Service Providers (ISPs) are today, broken. LTC Consulting has found that approximately 50% of all phonebills audited have problems in New Jersey that can be directly tied to these billing problems. These Comments include a number of CLEC and Customer examples and Appendix One supplies a collection of LTC Consulting client refunds from Verizon for billing errors. This means that the KPMG study, the study which shows that the OSS systems are "100%" in working order is seriously flawed because it did not catch and acknowledge these chronic and continual billing problems. As we will show, end-to end testing was never performed and this analysis has no basis in the actual customer experience. It also means that Verizon New Jersey does not fulfill Checklist 2 of the Telecom Act, and therefore does not qualify for entry into Long Distance. Secondly, Verizon is trying to pull a slick move on the public by submitting their application to the FCC, BEFORE the decision by the NJ Board of Public Utilities (BPU). We consider this a serious breach of customer public interest. It does not give Customers an adequate voice either at the state level or at the FCC to fully document and comment on the entire process. The current record to date shows that there is no level of residential competition and the facts presented by Verizon are "incomplete" or downright wrong. Because of the seriousness of our comments, TeleTruth (with LTC Consulting and New Networks Institute) has initiated a data collection campaign to submit evidence to the FCC that the Verizon OSS billing system is flawed. We are quite willing to work on this serious issue with the FCC. But in any case, Teletruth plans to continue to work with customers and the public in identifying these problems and recovering overcharges. In our opinion, the commission is likely to inflict irreparable harm on customers and small and large competitors alike if it now ignores these flaws and gives a passing grade to Verizon’s OSS system as part of the review of Verizon’s 271 application. It is in the public interest for the Commission now to examine and evaluate the nature and extent of Verizon’s OSS system and its flaws. There is an ever increasing record of documentation that should not be ignored. The commission will not do justice to the public interest, the process of deregulation and to itself if it does not take the time and devote the resources to remedying this apparent problem prior to 271 approval. . 1) Lack of Due Process ---- Slick Moves to Stop the Public's Involvement. First and foremost, on December 12, 2001, Verizon New Jersey filed its 271 application with the FCC. This was done right before the vacation of the FCC and the Christmas and New Years holidays… so that the clock was ticking even though most people didn't have time to respond to anything immediately. But more importantly, the FCC accepted this filing, even though the process at the state level was not completed. According to the Telecom Act, the FCC should have the state commission's decision BEFORE the FCC starts its proceedings. Collecting data is obviously part of the determination process.
The current situation forced the BPU to make its decision prematurely and have its decision rendered by January14th, 2002. On January 9th, 2002, the New Jersey BPU voted to support the Verizon New Jersey 271 application. In his remarks, Commissioner Butler expressed his personal outrage that Verizon’s action had forced the BPU to say "yes" prematurely.
It is our opinion that not all the evidence was heard. There were no public hearings for this important decision. The voices of over 4 million Verizon consumers were never heard because public hearings were never scheduled. Even a former FCC Commissioner, Susan Ness and New Jersey native, raised some very important points in her letter published on January 8th, 2002 in the Record- Bergen County. She stated:
Former Commission Ness also pointed to that the current evidence shows that the Bells should not be allowed into long distance because there is not an acceptable amount of competition in New Jersey and that letting Verizon into long distance could make the monopoly stronger.
To put the monopoly's control of Verizon into perspective --- Verizon still charges for Touchtone Service --- a service that cost $0 to offer. In a competitive environment, this charge would have been removed years ago. But there is no real competition in New Jersey. And even the materials supplied by the Bell company's President, Mr. Bone, requires the FCC to investigate because the work is riddled with half-truths. For example, the NJ Ratepayer Advocate showed that much of the President's presentation is misleading, or downright not true. Companies are being called competitors who do not offer service in the state, or some information being provided is based on guesswork -- and is "incomplete". (Re: In the Matter of the Consultative Report on the Application of Verizon New Jersey Inc. for FCC Authorization to Provide In-Region, InterLATA Services in New Jersey, Docket No. TO01090541)
Even the amount of actual competition is seriously in question. The Ratepayer Advocate's Office continued, demonstrating that there is no real competition in the state.
With this kind of record, it is obvious that the state needed to go over this information fully before it could make a sound decision on this important topic. There were some other serious issues about the entire process ----It is our opinion that Verizon deliberately filed with the FCC on December 20, 2001, knowing that the Christmas and New Year holidays would distract interested consumers and parties from being heard. In addition, the FCC never published the original public notice docket because of a glitch on the FCC website home page. Interested parties who wanted to submit comments were not even aware of the January 14th, 2002 comment deadline until cc docket 01-347 was "retrievable" on January 6th, 2002. Because of the importance of this matter and that all consumers be heard, TLC Consulting wrote directly to the FCC Commissioners on December 31, 2001, January 6th, 2002 and January 10th, 2002 requesting an extension of the comments period deadline. Based on the results of customer audits of Verizon billing performed by LTC Consulting, it is clear that the Verizon OSS system and related procedures are flawed and that there is a serious risk of customer harm--- effecting both the retail customer segment, as well as the CLECs and ISPs that depend on Verizon prices and billing for their competitive viability as well. Appendix One gives a list of just some of the LTC Consulting auditing customers, the problems they encountered, and their refunds. It is our position that the New Jersey BPU and FCC have not collected the proper data concerning the Verizon OSS to demonstrate compliance with FCC checklist item number 2. It is our position that the independent OSS testing conducted by KPMG is flawed and contradicts real world evidence. As we described in our opening remarks, Teletruth has initiated a data collection campaign to submit evidence to the FCC that the Verizon OSS billing system is flawed. We believe that the FCC should first examine this data before any definitive decision is made to allow Verizon into Long Distance in New Jersey. Verizon, in its press statements, including those by Mr. Denis Bone, president of Verizon New Jersey, claim that the OSS tested 100% accuracy and included 536 test points and yet Verizon phone bills are being sent to Verizon retail customers each month with hidden billing errors created by the same OSS that supposedly tested 100%. The fact is that the underlying OSS tested by KPMG is the same OSS used by Verizon for its retail customers. This is clearly stated in the Verizon OSS declaration submitted to the BPU and FCC.
On this basis, the existing retail customer phone bill is relevant to this matter. The reader should understand that the Billing and Ordering systems for the phone companies include many different procedures, computers networks, databases, installation orders, methods and procedures, systems documentation, etc. As the New Jersey OSS filing states: "The primary internal Verizon NJ systems that support provisioning functionality are":
Verizon New Jersey Has Not Met FCC Checklist Item 2 The FCC has established in prior 271 proceedings that in order to satisfy checklist item number 2, accurate phone bills must be generated. Many telephone bill experts estimate that approximately 50% of all phone bills contain billing errors. Indeed, our research obtained from auditing hundreds of New Jersey small businesses have confirmed similar findings. As some of the CLEC’s begin to make some inroads into the marketplace, we are just beginning to audit their end user customers. Already, we are seeing clear evidence that billing errors that existed on the Verizon retail account are being migrated to the CLEC. This is causing harm to the CLEC and the end user customer and ultimately harms ALL competition. KPMG Study Never Looked at Verizon Retail OSS Billing Problems The Verizon retail bills contain a high error rate. It is hard to imagine that the KPMG OSS study did not pick up this issue as part of its test plan. It is relevant to this 271 application because the underlying Verizon retail OSS is the same OSS that was tested by KPMG. On this basis, it is difficult to understand how 100% compliance has been achieved if close to 50% of retail phone bills audited by independent phone bill auditors reveal billing errors. Based upon our research obtained from auditing end user phone bills, we find that consumers remain confused about the charges listed on the phone bill. In many cases, the charges are lumped under the "monthly service" charge or contain misleading descriptions. It is very common to find billing errors in the following general categories:
And it is clear that the KPMG study, which the FCC is using as evidence did not do actual phonebills or CLEC cases… It, in fact never did an order "end-to-end" (RE: Application by Verizon-New Jersey Inc. for Authorization To Provide In-Region, InterLATA Services in State of New Jersey, Docket No. 01-347 transcript from the New Jersey Board of Public Utilities Board meeting held on January 9, 2002, Mr. Matta speaking on behalf of the KPMG study.)
We would like to use some actual cases to demonstrate the problems CLECs and Customers are encountering. Example 1) A Community Bank in Northern New Jersey A community bank in North Jersey migrated their local service to Global Crossing. The migration went poorly because many of the lines were not properly identified at the demarc and never connected to the PBX. After months of finger pointing between Global Crossing, Verizon and the PBX vendor, the customer switched back to Verizon. During this time period, the customer was constantly receiving complaints of busy signals and thought the problem was "not enough" trunks. They placed an order to add five trunks and after three weeks of waiting for a due date confirmation, the order was canceled. When Verizon retail attempted to migrate the customer back, they were blocked because Global Crossing orders were still pending and never canceled. Global Crossing contacted the customer and said it was too late to cancel the order because Verizon had dispatched a technician and the work was done. Since the demarc was on the second floor of the bank and it was impossible for the technician to gain access to the demarc, the Verizon technician improperly updated the order which triggered an incorrect bill. Several months after the service was migrated back to Verizon, the bank had a repair problem with one of the special circuits. When Verizon repair was called, the customer was informed that they were not a Verizon customer and would have to contact their local service provider. This is clear evidence that the service orders never fed the downstream repair systems to update their records.
Example 2) Small Business Customer in Trenton A small business customer in the Trenton area recently migrated from MCI back to Verizon. The MCI local service was being delivered via a T1 and was being migrated back to Verizon as regular business lines. The customer was knocked out of service for three days because the main number was never assigned any local facilities to terminate the main number. The customer was forced to call repair service and place a trouble ticket to get the service installed.
Example 3: A Small Business in Plainfield, NJ Unknown to the customer was the fact that a hidden charge existed on the phone bill for a special circuit known as a breakhunt circuit. Based upon a physical inspection of the demarc, there was no evidence that the circuit ever existed. Verizon was requested to confirm if the circuit existed and agreed that it did not exist. In addition to confirming that a non-existent service was being charged to the customer, the service was also being double billed in violation of the tariff. It is very troubling that a breakdown in the OSS could allow this to happen. It is even more disturbing that the Verizon service rep. knowingly issued a service order with the double billing and migrated a bogus service to the Custopak account. Example 4 - 7 Four New York Cases We are just beginning to audit New York customers who have migrated from Verizon to a CLEC. All of the cases currently underway involve the resale approach. All four clients being audited are victims of substantial billing errors. It should be noted that New York City is supposed to be open and fully competitive. It was the first state to allowed to enter long distance in 2000. The irony is that in the NNI surveys of Internet Providers, we found this industry was receiving sub-standard customer services and problems were continual. Therefore the networks are not open. To read our report on New York ISP Survey see: http://www.newnetworks.com/isptexasnysruvey.html Example 4) Small Business in New York In one case, the customer has been unable to migrate all the services to the CLEC and continues to receive a phone bill from Verizon and one from the CLEC. Both carriers are billing for the same lines or various components of a line such as the FCC subscriber line charge and local number portability. This has been unresolved since the original migration in December 1999. Example 5) Centrex Customer in New York The second case involves a Centrex customer who switched to a CLEC using the "migration as is" approach. Since Verizon never labeled the demarc at each location, 39 lines can’t be found. The Verizon "CSR" given to the CLEC does not show working lines by location, which is standard on a Verizon retail "CSR". As a result, the customer has been unable to resolve the issue because the CLEC will not contact Verizon to locate the lines unless the customer is willing to pay $75/line. Although account reconciliation and billing dispute resolution are part of the billing OSS, it appears that the process does not work and the CLEC wants to place repair trouble tickets to authorize a dispatch. This is not the proper procedure because it generates a false report trouble ticket and it makes it appear that the customer is calling in a trouble on a broken line. When this matter finally makes it way to the billing reconciliation group, the customer will potentially be denied credits/refunds because the trouble tickets will be used as evidence against the end user. Example 6) A New York ISP The third case involves an ISP that was actually a victim of a variety of billing errors. In some cases, certain business lines were underbilled for the dialtone but the main hunt group was overcharged call forwarding charges instead of programming the lines with hunting. Although the net effect on the customer was a small underbilling, if the customer were to move the service or make certain changes to the account, service could be interrupted or lost causing a serious disruption to the business. Example 7) A Federal Government Office The fourth case involves a federal government account that migrated from Verizon to a CLEC using the resale model. Just prior to migrating to the CLEC, the Verizon retail account was audited and a billing error was discovered involving a T1 circuit. The error was corrected and the account was migrated to the CLEC. After the migration was completed, the T1 overcharges that had been removed from the retail bill mysteriously appeared on the CLEC bill. On the basis of the audits performed so far, it is clear that the OSS is not performing at 100%. In fact, we have yet to see an accurate CLEC phone bill.
Line Discounts Are Effecting Thousands of Customers. Another example that impacts thousands of New Jersey small business accounts with 2-4 business lines, is the auxiliary line discount. Because the ordering and billing system require the manual entry of the USOC code "LAWTE" to apply the discount, it is frequently left off by the service rep. Since the OSS does not perform any sanity or linkage test to insure the discount is applied, thousands of Verizon retail customers are being overcharged. If Verizon New Jersey has serious billing problems caused by the underlying OSS, how is Verizon New York doing since their 271 filing was approved?
Based on the evidence collected to date, and our continuing efforts to supply more data, TeleTruth and its members believe that the Verizon New Jersey's application to enter long distance should be denied. It is our opinion that Verizon New Jersey has not met checklist item number 2. We are committed to providing additional and compelling evidence to the FCC in the form of "broken" phone bills as part of our data collection campaign. We believe that if the FCC rules that checklist item 2 has been met by Verizon without collecting all the evidence, that the 271 will be challenged.
Bruce Kushnick, Chairman, Teletruth Tom Allibone, Director of the TeleTruth Auditing Division January 14th, 2002
Appendix One
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