Posted:  05/2000

Bell Atlantic’s OSS Problems Spill Out of N.Y.
BY KIM SUNDERLAND

ell Atlantic Corp. (www.bell-atl.com) is scrambling to quash its OSS problems in New York before it moves on for similar OSS testing in Massachusetts, New Jersey and Pennsylvania, sources say.

In these other states, Bell Atlantic’s OSS testing has been suspended or delayed until it fully corrects its problems in the Empire State.

For instance, in Massachusetts the BOC has decided not to file its in-region interLATA bid with the FCC
(www.fcc.gov) until the end of the summer. The company had planned to do it sooner.

Some competitors say the delay proves Bell Atlantic hasn’t kept its competitive promises. In fact, several weeks after it began offering long-distance service, Bell Atlantic-New York (BANY) acknowledged to state telecom regulators and to the FCC that it had failed to meet its OSS performance standards. In a nutshell, it had misplaced or outright lost hundreds of thousands of its competitors’ customer change orders. While the penalties could end up totaling $27 million, some competitors say that isn’t enough.

“It’s a drop in the bucket for Bell Atlantic,” says Jason
Simonds, a partner with Midcoast Wireless (www.midcoast.net) and a board member of the Internet Service Providers Consortium
(www.ispc.org). “The company stands to profit in the billions because of its biggest-boy-on-the-block attitude. Any of the Bells can afford to waste millions by holding back their competitors.”

The problem in New York is far from resolved no matter what Bell Atlantic says, another executive comments. In fact, the source adds, Bell Atlantic has told competitors during almost daily calls that it believes the New York OSS problem isn’t limited to its software.

“Things are deteriorating there,” the executive says.

King of the Hill

Rolling downhill quickly in a snowball of OSS problems in New York, Bell Atlantic voluntarily agreed on March 9 to pay the U.S. Treasury $3 million, with additional liability of up to $24 million. It also must provide $10 million in credits to New York wholesale customers to address concerns they raised regarding the BOC’s OSS performance.

Specifically, competitors contend that BANY’s OSS is unable to handle large commercial volumes of ordering, which caused tens of thousands of delayed, lost or unaccounted-for orders.

Bell Atlantic is “committed to providing the best possible service to all our customers, and we have agreed to back up that commitment with guarantees,” said Tom Tauke, senior vice president for government relations at Bell Atlantic, following the announcement of the penalties against the BOC.

“Indeed, local phone competition in New York is thriving, and it continued to thrive despite the software issues we worked to fix earlier this year,” Tauke says.

Competitors have captured more than 1.5 million local phone lines, he adds.

Bell Atlantic has increased the capacity of its systems and developed new software that will let the company process up to 12,000 orders a day in New York, Tauke continues. As part of the FCC’s order, the BOC will provide the FCC with special reports on its OSS performance that include statistics demonstrating whether notifications for ordering and billing are provided as required by its wholesale customers.

The new measures are included in the existing performance assurance plan filed with the New York Public Service Commission
(www.dps.state.ny.us). Failure to meet the performance standards will result in further penalties, according to regulators.

“Overall, this agreement provides an even greater service guarantee to our wholesale customers,” Tauke says.

Meanwhile, Tauke refutes what he calls the “dramatic claims” competitors have made. During a March 7 press conference, he said that Bell Atlantic realizes its systems aren’t perfect, but its performance assurance plan was devised to give competitors a guarantee that if Bell Atlantic didn’t adhere to its competitive promises, they would be compensated.

The ultimate settlement reached, however, doesn’t satisfy AT&T Corp. (www.att.com), one of BANY’s largest competitors and customers.

“There are serious questions as to whether financial penalties and paper promises are sufficient to ensure that Bell Atlantic will give an even break to local competitors in New York,” says Jim Cicconi, AT&T’s general counsel. “Critical problems persist.”

Cicconi says the key component of Bell Atlantic’s New York order system collapsed irretrievably. He adds that the replacement is being rushed, untested, and no one can be sure whether it’s ready to handle competitors’ commercial order volumes.

To date, competitors have limited experience using Bell Atlantic’s new system, NetLink, and they will continue to test and monitor system performance before migrating all of their customer traffic over to the new system.

“The unfortunate truth is that Bell Atlantic has corrected none of its systems problems,” Cicconi claims.

This inaction hurts competitors, sources say. For instance, during a March 7 state regulators conference in Washington, AT&T Chairman C. Michael Armstrong told attendees, “Our brand is damaged each and every time they fail to provide our customers with service or features in a timely manner. We also suffer direct financial harm from lost revenues and costly re-works.”

At the time, Armstrong requested that Bell Atlantic voluntary cease long-distance provisioning in New York until its OSS problems are resolved. Bell Atlantic refused.

Because of its refusal, AT&T and other competitors continue to complain to the FCC. It’s likely that AT&T again will seek an FCC order that would direct Bell Atlantic to fix its systems problems or face suspension of its authority to provide long-distance service. So far, competitors have a friend at the FCC who feels the same way. FCC Commissioner Gloria Tristani, who dissented from the commission’s near-unanimous agreement with Bell Atlantic, believes the more appropriate response would have been to force Bell Atlantic to explain why its Section 271 approval shouldn’t be suspended.

“Evidence from the [FCC’s] Enforcement Bureau’s investigation in February clearly suggests that Bell Atlantic’s performance in providing order acknowledgements, confirmation and rejection notices, and order completion notices for UNE-Platform local services deteriorated following Bell Atlantic’s entry into the long-distance market,” Tristani said. “I believe the commission should have placed the burden on Bell Atlantic at that time to demonstrate that it had not ceased to meet a fundamental requirement of its approval to provide long distance service in New York.”

Fraternal Twins

There are similarities between Bell Atlantic’s New York system and its system in Massachusetts, Bell Atlantic spokeswoman Susan M. Butta says. “We wanted to address the software problems in New York first before going forward in the other states.”

Bell Atlantic confirms that it has pooled resources–such as personnel and money–from its operations in Massachusetts, New Jersey and Pennsylvania to help stem the order-processing problems in New York.

While subsequent OSS testing in those states is delayed, Butta says, Bell Atlantic remains on track to make Section 271 filings with the FCC for New Jersey and Pennsylvania later this year and for Virginia in early 2001.

According to MCI WorldCom Inc.’s
(www.wcom.com) regional director of public policy Carl
Giesy, “The OSS tests have been delayed in New Jersey and Pennsylvania, and that’s an extreme concern to us. New Jersey tests were just getting under way and now we don’t know how long they will be delayed.”

New Jersey regulatory attorney Kim Wild adds, “We’re distressed that Bell Atlantic is taking resources from New Jersey and other states to fix New York. They’re robbing Peter to pay Paul.”

The New Jersey Board of Public Utilities
( www.njin.net/njbpu) ordered Bell Atlantic’s current OSS testing stopped. They have requested an evaluation of the New York situation to ensure that similar problems don’t occur in New Jersey.

“I commend the New Jersey BPU’s decision to reevaluate its testing process,” said a consumer lobbyist in Washington. “Unfortunately, as the events continue
to unfold and new evidence comes to light in New York, it will become more clear to all state regulatory agencies, this is not a
problem that can be quickly or easily addressed.”

Also in New Jersey, several competitors want the BPU to allow them to evaluate and comment on Bell Atlantic’s OSS draft test plan.

Among the flaws the CLECs have noted within the 140-page OSS test plan are the choice to begin the test with soon-to-be-obsolete software and the absence of any assurance that all failures will be retested until they pass, Giesy says.

“The board need only look across the river to New York, where the incumbent’s inadequate testing has harmed tens of thousands of customers, to see the importance of a robust, military-style test,” according to a letter signed by several CLECs and filed with the BPU.

Competitors request that “the testing should not begin until the board has considered fully and fairly the comments of all parties and incorporated such comments into the [master test plan] as appropriate.”

Now What?

BANY’s Section 271 approval is a milestone for the telecommunications industry. No one ever said that regulatory oversight would be a cakewalk.

Federal and state telecom lawmakers surely have their work cut out for them–and that’s in addition to the enormous political pressure they face to make this first Section 271 approval work successfully.

“We are resolved that the local phone market in New York will remain open,” says FCC Chairman William E. Kennard. “Our action will ensure that Bell Atlantic performs, or bears the consequences of its failure to meet its obligations.”