Competition in the telephone business has brought confusion and problems for the consumer in a year marked by sharply higher rates for local service and a continuing slide in long-distance costs.
Problems in the year since the breakup of the Bell system include lengthy service delays and a new set of telephone companies performing different equipment servicing, wiring and telephone line maintenance tasks -- prompting many large users to see if they can do a better job without the phone company.
Many federal agencies and some large business customers are now building portions of their own telephone networks, bypassing the local Chesapeake & Potomac Telephone Cos. Should many customers leave the network, residential phone bills could end up rising further to pay for idle equipment.
"Twenty-five to 30 percent of large customers already have plans to bypass the local network," said Thomas M. Gibbons, president of the C&P Telephone Cos., which serve Maryland, Virginia, the District of Columbia and West Virginia.
C&P stands to lose $30 million a year in revenue from bypass if all 24 large federal agencies in the District construct their own local networks. The company took in revenue of slightly more than $500 million in 1983.
At least 19 federal agencies plan to build such networks, according to Don Hardesty, assistant regional administrator for information resources management for the General Services Administration national capital region. "Any way we can reduce those telephone costs, we will," he said.
Hardesty estimates the government pays the telephone company $80 million a year for local service. The federal agencies combined can save $16 million a year in local telephone service by linking up with one big private network.
In a report to the Federal communications Commission, Bell Atlantic Corp., holding company for the C&P Telephone Cos., listed seven companies bypassing the local network in the District of Columbia, 40 in Maryland and 15 in Virginia, among them the U.S. Senate, Metro, the Potomac Electric & Power Co. and Westinghouse Corp.
Residential customers, for whom the benefits of the competition at the local level are not as apparent, have been left with a steep learning curve to master.
A recent Business Week/Harris Poll discovered that the public believes by a margin of 64 to 25 percent that breaking up the Bell System was not a good idea. Eighty percent of those interviewed felt that business customers got more benefits from the breakup of the system than did residential users.
But all classes of customers are having their problems. "Millions of ordinary consumers and small-business people are suffering complex and rising phone bills, service delays and confusion about how to deal with the variety of companies now providing bits and pieces of what was once unified service," said Glenn E. Watts, president of the Communications Workers of America.
Small-business people are finding it harder to afford rising telephone rates. "American Telephone & Telegraph Co. and C&P Telephone Co. have doubled the cost of my direct lines between Washington and Northern Virginia," said Stuart Hack, a Baltimore small businessman. "They're all pointing fingers and saying it's not our fault. . . . There is absolutely no other choice that I have, and I'm furious."
Problems still remain with coordinating the different telephone companies, although the situation is improving, said Ben Edney, assistant vice president for operational services for BDM International Inc., a professional services firm that does most of its work for the U.S. military.
"Early this year was a disaster because the Bell operating companies and American Telephone & Telegraph Co. weren't speaking to each other," said Edney. "If you wanted to get your phone fixed you had to be an engineer to know who to call, and if you called the wrong company, they charged you but didn't fix the phone."
Getting C&P to reconfigure the office telephone network took three days before divestiture and 40 to 50 days after divestiture, Edney said.
But "things have improved immeasurably since a year ago," said John Daly, corporate telecommunications manager for Planning Research Corp., a consulting and engineering firm. "Their responses have improved 100 percent."
But a lack of detailed phone bills breaking out the specifics of new costs and charges is a problem, businesses say.
Service delays, lack of coordination and telephone bills that are not easily deciphered are "the fallouts of divestiture," said C & P Telephone Cos." Gibbons. The companies are smoothing the transition by filling orders on time and simplifying billing, he said. "the incredible part is we maintained our equilibrium and service didn't go down the tubes."
But divestiture's double whammy has to do with rising phone rates coupled with residential and business "access charges" paid to the telephone company for upkeep of the long-distance portion of the local telephone network.beginning Jan. 1, residential users and single-line businesses will pay $1 a month per line, rising to $2 in 1986. Multiline businesses began paying $6 a month per line last May.
The charges are being shifted from a portion of fees long-distance companies pay local telephone companies and pass on to customers. The "artificially" high charges of long-distance access may cause businesses to bypass the local network. If everybody pays for the upkeep of the network, Bell Atlantic argues, there is less economic incentive to bypass.
Although federal agencies and businesses electing to leave the local network say rising rates are a primary motivation, they also contend the telephone company often cannot satisfy technological needs for high-speed data transmission.
"The system we have now doesn't fulfill our data transmission needs; the system we are installing now will," said Sanford Glassman, chief of the telecommunications division for the office of the secretary at the Department of transportation.
Private networks allow companies to exert more control over their telehone systems and maintain predictable costs, say businesses. Moving a phone used to cost $20, said BDM's Edney. "Now the phone move is billed on a time and materials basis. . . . It may cost $22 or $122 or anything in between."
Higher-speed data transmission capability, more flexibility and less expense in rearranging telephones has led BDM to plan the installation of private computerized telephone switches in three adjacent buildings. The switches can be programmed, just like a computer, to give a work station a new telephone number.
Trying to keep pace Bell Atlantic is rapidly upgrading the telephone network to provide businesses with high-speed voice and data transmission services they want, said John Morgan, general manager in the government systems division of Bell Atlantic Corp. Customers are also being taught how to rearrange telephone stations themselves.
But Bell Atlantic needs state regulators to be "more responsive" to "deaveraging" rates for business telephone service so the largest customers do not continue to subsidize the rates of customers in areas that generate less voice and data traffic, he said.
"We have tried to explain the merits of staying with Bell atlantic and what the plans are for the digital evolution of the network," he said. Once large business customers leave the local network, "they tend to go other places for all of their services," increasing residential phone costs.