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NNI Complaint About Verizon, using CWA Report Recent Bell Staff Cut Information
(from: The Unauthorized Bio of the Baby Bells (c) 1999)
Chapter 17 Employee Cuts and Poor Customer Services Throughout the last decade, the Baby Bells have been aggressively been reducing staff, sometimes referring to it as "new productivity efficiencies" or at other times "getting ready for competition". Either way, staff cuts have been deep, - over 235,000 people to date, and almost all cuts have come from the local telephone company employees who work for local customers. The irony is that almost all telco filings related to the information Superhighway stated that the Info Bahn would create new jobs. (271) Employee cuts have yielded continuing cost-of-doing-business decreases, and ever increasing profit margins. For example, NYNEX's 3rd Quarter 1996 report shows massive savings of $650 million dollars from staff layoffs and restructuring of the company. In fact, when the final restructuring is finished and 16,200 NYNEX employees have been laid-off, the company expects a whopping $1.7 billion dollars savings, annually. (272) "Since the inception of process re-engineering and the special pension enhancement program in 1994, approximately 11,900 employees have accepted the retirement incentives. On an annualized basis, this will equate to an average reduction in wages and benefits of approximately $650 million. "It is anticipated that the restructuring will result in reduced costs during the period of restructuring and reduced annual operating expenses of approximately $1.7 billion beginning in 1997. These savings include approximately $1.1 billion in reduced wage and benefit expenses due to lower work force levels, and approximately $600 million in non-wage savings including reduced rent expense for fewer work locations and lower purchasing costs. Partially offsetting these savings are higher costs due to inflation and growth in the business." [emphasis added] Staff cuts have also led to serious fallout. - Customer complaints. Numerous states' Public Utility Commission have levied fines on the Bells for not being able to answer their telephones. We will return to the customer dissatisfaction shortly. But first, let's explore the cause, massive employee cuts. Bell Employees: Walking Through the Numbers In order to help the reader understand employee lay offs, we will walk through this section in steps. Step One: Staff at the Baby Bells- How it Works The Regional Bell Operating Company is a holding company which controls a number of smaller local telephone companies. For example, Ameritech owns five local state phone companies: Ohio Bell, Michigan Bell, Illinois Bell, Indiana Bell and Wisconsin Bell. Therefore, the Regional Bell, tells the local telephone companies to cut staff. Meanwhile, the parent holding company, Ameritech, added staff for it's various projects and services. Step Two: Total Bell Employees In 1984, the RBOCs had a total of 577,000 employees. By the end of 1996 there was 387,900 total workers, a -33% decrease. The next exhibit highlights just the RBOC staff cuts. The first exhibit shows the total Regional Bell reductions of staff, including the holding companies and its subsidiaries, from 1984 throughout 1996. (273) Total RBOC Employees Cuts, 1984-1996
Step Three: The Lay-offs 1994-1997 Most of the staff reductions were announced in late 1993 and early 1994 and have effected the last three years. These cuts, including a whopping 21,500 at Bell South or NYNEX's 16,800, were all designed as "cost efficiencies". (274) Announced RBOC Staff Reductions for 1994-1996
However, the overall numbers presented do not reveal the real changes that occurred over the decade. The primary change, and not for the better, has been a serious reduction of staff from the local telephone companies. While the holding companies had staff increases, the local telephone companies had massive decreases. Step Four: Holding Company vs Local Phone Company: The next exhibit shows that the local telephone companies, specifically the staff that handles the telephone subscriber, has had much deeper cuts. The phone companies lost 235,000 while the parent company, added 45,000 staffers. In fact, based on announced cuts, by 1997 there will be 236,000 local telephone company staff reductions. (275) Summary of Data for Local Telephone Company RBOC Employees, 1984-1997 Telephone Company Staff Cuts Increase of Parent company 45,056 142% Total Reductions, 1984-1996 235,550 -31% Step Five: The largest cuts have been to telephone company staff that handles the local subscriber. Since the flood, "Employees-per-line", the standard benchmark for the number of employees working for subscribers, dropped an average of 57% from 1984-1997. (276) That's half the staff required to cover more work. RBOC Employees-Per-Line Cuts, 1984-1997 Employee-per-line reductions -57% Step Six AT&T Break-up cut staff too: It is a little known fact that 75,000 other local telephone company staffers were cut between 1983 to 1984, during the AT&T break-up, bringing the total of cut local telephone company workers to 310,000. (277) Local RBOC Phone Company Staff Cuts in 1983 to 1997 AT&T Local total From 1983 to 1984 75,000 Total RBOC Reductions, 1983-1997 310,550
Staff Cuts Lead to Customer Dissatisfaction and Fines. One has only to go to web sites such as nynexsucks.com or USWorst.com to know that customers are having problems with their service. In fact, from the subscriber perspective, the massive staff cuts have had a detrimental impact on telephone subscribers, revealed in both the rising number of complaints as well as consumer surveys which found a growing resentment to the Bells. For example, JD Powers Consumer Study of phone service found that for at least three RBOCs, an average of 26% of customers were not satisfied with their phone company's services. Also, the exhibit below shows that only 75% of complaints were resolved in a timely manner, with NYNEX having only 70% of complaints actually dealt with promptly. (278) Customer Complaints and RBOC Dissatisfaction, 1996
Our consumer surveys from 1993 and 1995 show a dramatic increase in Bell customer dissatisfaction. In 1995, almost 39% of the population gave the Bells a failing grade in one of seven customer service areas, more than double the number of dissatisfied customers in 1993. (279) Consumer Grades for Local and Long Distance Cos., 1993-1995 1993 1995 15% 39% gave the local telephone company a failing grade
in one of the seven customer service questions Also, complaints are up across America. Court cases and Public Utility Commissions (PUC) actions have occurred in numerous states in the Ameritech, US West, Pacific Telesis, and NYNEX regions. According to an LA Times article, (6/18/95) the Ohio's PUC received 10 times the number of complaints in 1994 than the previous year, while NYNEX missed 142,000 appointments in the last three months of 1994. (280) And the problem continue. According to NYNEX's 1996 3rd quarter report, "New York Telephone will be required to issue rebates to customers of at least $102 million for not maintaining adequate service standards. (281) As a New York Post columnist, Irwin Stelzer, put it:, (2/26/97) (282) The New Jersey Ratepayer Advocate, in their review of Opportunity New Jersey and the Bell Atlantic NYNEX Merger stated that NYNEX's states, including New York, Massachusetts and Maine all had monetary penalties, while New Jersey has also had a declines in service. First about NYNEX: (283) "NYNEX has had an abysmal track record with regard to quality of service. In the last three years, NYNEX has been punished for its failure to meet telephone service quality standards and, consequently, subject to monetary penalties in at least three of the jurisdictions in which it operates: New York, Massachusetts and Maine. In New York alone, in November 1996, the Commission found that NYNEX's performance warranted $72.9 million in penalties, and after granting certain waivers, ordered $62.3 million in rebates. " Bell Atlantic/New Jersey: (284) "BA-NJ's quality of service has also declined since the adoption of the Plan. Although the decline has been from a high level of service, any decline should however be of major concern to the Board, especially when quality of service should be increasing under the Plan, since the company is deploying cutting edge technology. For example, BA-NJ's performance in the following service categories was lower in the year ending September 1996 than in 1993, 1994, and 1995: (1) percentage of service order provisioning completed within 5 working days; (2) percentage of service order provisioning appointments met; and (3) percentage of directory assistance calls answered within 10 seconds. " NNI's position on staff reductions is simple. The ratepayer is the one who is being impacted by the staff reductions because services are not getting better. In fact, in some areas, such as customer services, the reductions have meant more time on hold and more complaints to the PUCs about service. While the Baby Bells state that productivity is really a goal, the reader should ask: In a non-competitive environment, are staff cuts productivity driven or shareholder-profits driven? Secondly, we contend that staff reductions have decreased the ability for the remaining staff to provide adequate subscriber coverage, including their installation and implementation of ISDN. Based on the data presented, we expect the problems to get worse, not better. Other customer service issues also should also be examined. For example, most Bell companies only offer live customer services from 9 AM to 5 PM, and few companies have hours on Sunday. In future sections we will argue that the utility has an obligation to expand its customer operations, including adequate staffing of customer services. Finally, why haven't prices decreased dramatically if the cuts in staff have been saving so much money? |