Examination of the Local Telecommunications Networks and Related Policies and Practices of AT&T California and Frontier California

Corporate choices made by AT&T and Verizon, and Frontier Communications’ dire financial condition created the growing divide between relatively modern telecommunications infrastructure in affluent urban and suburban communities and the decaying infrastructure in poor and rural ones. The result is “deteriorating service quality”, “persistent disinvestment”, an “investment focus on higher-income communities” and an “increased focus on areas most heavily impacted by competition.” When addressing service quality going forward, the California Public Utilities Commission should:

1. Expand the financial penalties for carriers that fail to meet the minimum GO 133-C/D service quality standards.
2. In an effectively competitive market, persistently poor service quality would drive customers to take their business elsewhere. Where competition is not present, fines imposed due to an ILEC’s failure to meet service quality standards should be high enough so as to have the same financial consequences as poor service quality under competitive market conditions.
3. The GO 133-C/D maximum Customer Trouble Report Rates of 6%, 8% or 10% (depending upon wire center size) of switched access lines per month are far too generous, and failure rates as high as these can hardly constitute acceptable service quality. The carriers have had little difficulty in meeting these standards, and they should be revised downward.
4. Unless carriers can offer technically valid explanations as to how and why smaller wire centers experience the poorest service quality, the minimum GO 133-C/D standards should be applied uniformly for all wire centers.
5. The GO 133-D fines should vary based upon the extent of a carrier's failure to meet any service quality standard, rising in magnitude as the extent of the shortfall increases.
6. Retain its requirement that Uniform Regulatory Framework carriers maintain their Part 32 Uniform System of Accounts ("USOA") regulatory accounting records and submit annual ARMIS-type financial reports. The requirement should be expanded to also include wire center level accounting data. Carriers should be required to submit these to the Communications Division on a semi-annual basis. 
7. Establish a process to proactively examine the alternatives that would be available to maintain adequate service to Frontier California customers in the event that the parent company no longer has the financial resources to provide safe and reliable services in California.