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Liars on the Line

While US West delayed service for months, the company stockpiled millions.

US West spokeswoman Anna Osborn says she is limited in what she can say about the current lawsuit because the case is in litigation, but she describes it as "inflammatory and untrue.

"US West believes the suit is without merit and the PUC is the proper forum for these concerns," she says. "We are already working with the PUC on service-quality issues. The statements in the filings are claims, not facts. Much of the information is distorted and not true. When the evidence is presented, it will show that US West made every reasonable effort to serve customers. I can't comment on the specifics."

But the complaint is highly detailed and makes specific references to dozens of different company records, including internal memos, consultant reports and corporate documents. The picture that emerges is one of a company whose rank-and-file employees were deeply frustrated by their inability to meet the needs of customers while executives were slashing jobs, shifting money out of telephone operations and boasting of record profits.

Swear to tell the truth: US West CEO Sol Trujillo will testify about claims that his company lied to the public.
Swear to tell the truth: US West CEO Sol Trujillo will testify about claims that his company lied to the public.

Details


Previous Westword article

"Bells Are Ringing,"
August 12, 1999
US West put service on the line so it could make the deal.

"Disconnected,"
April 8, 1999
As US West pulls strings at the legislature, it could cut the lines to competition.

"Calling to Collect,"
October 23, 1997
The City of Denver declares war on the state legislature over a telephone bill.

"Circling the Wagons,"
November 7, 1996
Consumer groups are banding together to fight off US West's rate hikes.

"Hide and Seek,"
October 3, 1996.
US West's game: keep its service record hidden from public view while charging the public more money.

"Dial 'M' for Monopoly,"
July 7, 1996
In the brave new world of telecommunications, US West has an ace up its sleeve: the residential phone customer.

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The debacle may have begun in April 1992, when several executives flew to Japan to study ways to increase profits. They became enamored of a Japanese strategy to raise profits by cutting jobs and reducing inventory. Soon after, senior executives Tom Bystrzycki, Will Smith and Charles Lamar created a company-wide "re-engineering" plan that set a four-year goal of increasing revenues by 5 percent per year, reducing costs by 4 percent per year and laying off more than 4,000 employees.

US West chose to undertake this re-engineering just as Colorado and the other mountain states faced a massive influx of new residents. Several of the departments targeted for layoffs were directly involved in providing new telephone service; the company cut hundreds of positions in its telephone-network division, according to documents cited in the complaint.

As customer complaints skyrocketed, US West did what it frequently does in a crisis: It hired a consultant to tell it what had gone wrong.

In 1994, the consultant, who was not identified in the complaint, told the company that the re-engineering was poorly planned and had resulted in chaos for employees and customers; it also warned that US West had a history of not dealing with deteriorating service "until things were awful." The consultant also reported that many US West managers believed the company's decisions were driven by financial considerations and not customer service.

US West's conduct was "an extraordinarily clear example of the ways of evasion of the truth in the example of the deteriorating customer service this past summer," the consultant wrote. "That had to be known, because there are daily requirements for critical outcomes. Yet no one stood up and acknowledged the problem until it became a crisis. Several levels of management had to have known what was happening."

The consultant went on to warn that company executives must "stop contributing to doubts about strategy by saying customer service is the highest priority -- a strategic decision -- and makingdecisions that put financial considerations first."

In 1992, the PUC logged 2,500 complaints against the company; last year they numbered more than 6,000. (Most of the other states in US West's territory -- which extends from Oregon to Iowa -- reported similar experiences.) Yet US West executives continually assured the public that the problems were only temporary and that they would soon have things in hand.

"We are making significant strides in Colorado to meet the growing demand for our telecommunications services," former US West vice president John Scully boasted in January 1995.

A few weeks later Scully claimed that US West had increased its investment in the telephone network by almost 50 percent to meet the increasing demand for phone lines. Later that year he even launched a campaign to hike residential phone rates in Colorado, claiming the company was losing money on its residential phone service. "Prices need to be more reflective of the true costs in all parts of the business," he told the Rocky Mountain News.

While Scully was trying to shake down Coloradans, US West's number of "primary held orders" -- customers who couldn't get a single phone line into their homes or businesses -- was rising dramatically. Over a period of about six weeks in the spring of 1995, the company reported 1,186 held orders.

At the same time, US West was becoming increasingly paranoid about negative publicity -- in one memo an executive fretted that reporters were "following the service story closely. They are educated and have access to data" -- and chose to deal with the problem by fighting with the PUC over the definition of held orders.

For example, requests for additional lines weren't counted as held orders, and service delays that didn't fall within the time periods that US West reported to the PUC were deleted. The lawsuit refers to documents that reportedly show the company removed held orders from its system at the end of 1994 to reduce the annual number reported to the PUC; those same held orders then reappeared in January 1995.

A current US West employee who asked not to be named claims the company still engages in this practice. "They're deleting the date from the held orders so the PUC won't know that it's a held order," says the employee.

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