Pipeline Publishing, Volume 4, Issue 5

	This Month's Issue:
	Keeping Promises

Commitments to Customers
in a World of Competition

By Craig M. Clausen

Ma Bell Takes Care of America’s Telecom Network

Our telecommunications industry is one of America’s true success stories. Built from the ground-up on American ingenuity, the Bell system and its independent cousins were catalytic in transforming the United States into an economic powerhouse during the first half of the 20th century. While sound-minded observers debate the value of the organizational structure that developed through the 1980s, few would question the overall quality of the network or service offered.

Keep in mind that the Bell System was, to a significant extent, driven by engineers. Any fault in the network – their network – was perceived as a direct reflection of their professional know-how. Bell System employees guarded their network like pit bulls for various reasons, but without doubt one of their prime motivators was the unwillingness to let anyone screw it up. Therefore, innovation was slower than it could have been and non-Bell devices, such as the Carter phone, were barred from being attached to the network.

Contrary to what economists would expect, the old Bell System was committed to providing sound and reliable service, even if that meant spending more or not cutting enough.

Creative Destruction: Enter Competition

Competition, in contrast, can be a messy proposition. With “Ma Bell,” end-users knew the service and quality they would receive. Quality was a sure thing. With the introduction of competition, consumers who switched carriers presumed that they would receive the same level of service from a competitor as they did from AT&T. And, the initial long-distance carriers banked on that presumption. End-users soon found that not all competitors were created equal and that there were going to be differences in service quality and customer care. This meant, in turn, that competitive choice was a two-edged sword: new services and improved rates may have been available but at the expense of service quality. One had to be able to discern the good from the not-so-good. These new competitors didn’t necessarily hold themselves to (or simply provide) the same level of quality as Ma Bell.

The Network of Networks Emerges & The “Who You Gonna Call?” Games

With new market entrants and service providers springing up during the 1990s, America’s network became a “network of networks.” The various sub-networks of this patchwork could, and often did have varying service quality levels and end-users’

Competitive choice was a two-edged sword: new services and improved rates may have been available but at the expense of service quality.

experiences varied accordingly. Still, given that each sub-network relied on numerous others – including components provisioned by other competitors – it became too easy for nascent providers to pass the buck and point a finger at another service provider whenever outages or service deficiencies popped up. The blame game became a convenient way to excuse service quality issues. Customers were often left shaking their heads wondering who to turn to when an issue arose.

This problem became particularly acute during the mid-1990s as switched local competition began to take hold. “Switched” competition meant that competitive providers (the “competitive local exchange carriers” or “CLECs”) had to, through increasingly complex arrangements, directly interconnect their networks with those of their primary competitors – the Bell Operating Companies. Whether or not it was justified, Ma Bell’s offspring, the Baby Bells, quickly became the scapegoat for CLEC service deficiencies.

A Case In Point:

Winstar Communications, Inc., a now-defunct CLEC that attempted to provision its own local access and bypass incumbent carriers by using fixed wireless solutions, experienced numerous service quality issues. A common refrain, however, heard by customers from the company was that the fault lay with another service provider. More times than not, Winstar laid the blame at the incumbent’s feet; other times it could be a long-distance carrier’s fault or an Internet backbone carrier’s problem. Rarely, though, did anyone hear a mea culpa from Winstar.

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