Verizon, Pennsylvania Use Workshops to Work Out Disputes

The report details the interplay between commission and carrier after an audit of the sixth update that Verizon does every two years. The audit, which reflected Verizon’s 2005- 2006 modernization commitments, led to 23 recommendations for revamping Verizon’s modernization plan. The company and the commission disagreed on 10. In September, the regulator gave its staff and Verizon until February to come to terms and set standards for Verizon’s broadband provisioning.

In the workshops, held October through January, Verizon won six of the 10 disputes. The PUC got its way on three. The sides compromised on the other one.

“From our perspective, it was very positive,” a Verizon representative said. As the audit contract required, the company met with commission staff and outside auditors about preliminary findings, Verizon said by e-mail. “From those meetings the idea of continuing the workshop/collaborative mode with Verizon and Staff following the audit report took form.”

The carrier credits the workshops’ successful outcome to a “very favorable” audit that found “Verizon had largely met its commitments and reporting requirements,” the company said. “The issues left were not so significant that they could actually change the outcome of the audit.” Some of the lingering matters resulted “from audit recommendations that were not practical for real world application, and the Staff worked with Verizon in the collaborative process to reach reasonable resolutions of these issues,” it said.

Workshops are a tool that the Pennsylvania regulator sometimes uses to resolve disputes with business, said the commission’s press secretary, Jennifer Kocher. The Verizon sessions were “not unique, but not typical, either,” she said. “It’s case by case. The goal this time -- to resolve outstanding issues -- was accomplished through a dialogue that gave the commission an opportunity to better understand Verizon’s point of view and, I assume, gave Verizon an opportunity to understand the commission’s perspective. The fact that the report is a joint document speaks volumes for the process.”

In addition to resolving disputes, the negotiators set benchmarks for the reporting period through Verizon’s ninth report, due in June 2013. They agreed to wait until late 2012 to set provisioning benchmarks for 2014 and 2015, using data that emerge as Verizon rolls out its FiOS service. The commission is to publish results of that workshop, including proposed agreements, before 2013. Meanwhile, Verizon and the commission have accepted the Jan. 27 joint report. The commission told Verizon in a letter that it will continue to hold the company to its modernization plan.

In the workshop sessions, Verizon convinced commission aides to agree that, contrary to the recommendations, there’s no need for Verizon to verify spare fiber capacity, to mechanize fiber facility record-keeping, to calculate broadband availability using a universal standard, to count customer-caused delays against its provisioning performance, to document how it calculates performance or to compare field data on working and spare fiber with company inventory records. The commission staff convinced Verizon to agree to mechanize its modernization-plan reporting to reduce risk of human error and to document that mechanization process, to calculate broadband availability using only lines readily available for the service and to use consistent data sources in reporting broadband availability in the updates every two years and on its Web site.

The most complex debate involved the extent to which the company’s reports on broadband availability should reflect orders not fulfilled within the time called for, and whether updates should offer more detail about on-time provisioning of orders and calculate times for outliers. The negotiators compromised.

Verizon acknowledged that provisioning performance is an efficient criterion, proposing DSL and FiOS provisioning benchmarks through 2012. It suggested setting benchmarks for 2013-2014 and 2015 at the 2012 workshops. The commission’s staff agreed. The parties also agreed that Verizon will be held to 95 percent provisioning performance on DSL for 2008, 2010 and 2012. For FiOS data, the provisioning performance benchmark will be 65 percent for 2008, 70 percent for 2010 and 75 percent for 2012. The company and the commission agreed on a 95 percent benchmark for 45 Mbps service for 2008, 2010 and 2012.

It’s unreasonable to expect “100% perfect” provisioning of 1.544 Mbps service within 10 days, or of 45 Mbps service within 60 says, the parties agreed. Given historical evidence and the maturation seen with DSL and 45 Mbps, they said, Verizon’s performance can be treated as “per se adequate” if during 2007-2008 the company is found to have provisioned 95 percent of DSL orders within 10 days and of 45 Mbps orders with 60 days. “The reason lower benchmarks are appropriate at this time is that FiOS is being delivered to Pennsylvania customers on a brand new network,” the report said.

If Verizon does miss a FiOS benchmark, the commission said, it may investigate the effect on broadband deployment. And even within the safe harbor, the report said, Verizon risks penalties if the regulator finds that the company “negligently or intentionally failed to provide adequate or reasonable service to any market or submarket or to any individual customer who wanted broadband service installed at his home or business or for failing to meet any other NMP commitment.”