After spending $3 billion the past few years to get back into the long-distance business in its 14-state territory, Qwest Communications International Inc. isn't sitting back and watching the grass grow.
The Denver-based telecom company is facing several challenges in Utah, such as competition from other companies, including Comcast, for local phone and high-speed Internet service. It also is trying to maintain high quality-of-service levels and keep morale on the upswing as the company rebounds from corporate troubles so widespread that Qwest has been equated with Enron.
Robin Riggs, the company's Utah president, said last week that long-distance sales already have been a hit — "we felt confident we could do well with it," he said — since the Federal Communications Commission gave the go-ahead for long-distance re-entry, but he and company spokesman Michael Dunne noted also that internally the company is feeling good and hoping customers do the same.
"After the past couple of years we've had, we want to genuinely repair some of the reputation, get people to be jazzed about our service, get people to be excited about coming to us for a bundle — like long-distance, data and local," Dunne said. "That is a main focus of the leadership of Qwest.
"We've introduced this whole mindset of 'Spirit of Service' and really in some ways returned to the roots of the company: realizing that local telephone service is critical, something we have to do well and that people have to trust us. Ultimately they probably won't buy data and long-distance if they don't like what we're giving them for local service. It's not sexy, it's not jazzy, but it's something we have to do for the foreseeable future."
While Qwest's reputation has taken hits in recent months due to corporate accounting troubles and federal investigations of former Qwest executives, at the grassroots level, statistics have indicated that the company's customer service is top-notch. The company is trying to plow new ground in a field once tended by predecessor US WEST, often derided as "US Worst."
"Our service-quality figures have never been better, and, anecdotally, every time I run into somebody, they tell me, 'Hey, I just had this great experience with Qwest that I wouldn't have had two years ago,' or 'someone was really good to me on the phone when they might not have been before,' " Riggs said.
Residential and small-business service data for the company compiled for Utah at the end of 2002 indicated that more than 99 percent of customer installation commitments were met on time, the best results in seven years; repair commitments were met more than 95 percent of the time; the number of repeat repairs decreased by nearly 14 percent from a year earlier; more than 90 percent of service outages were repaired in a day or less, 3 percent better than a year earlier; and no customer at the end of 2002 waited longer than 30 days for the installation of the first telephone line.
Open for debate
Still, what statistics and perceptions reveal are in the eye of the beholder.
For example, Qwest fared poorly, but still showed strong improvement, in the American Customer Satisfaction Index, published quarterly by the University of Michigan Business School.
Researchers calculated a composite score up to 100 for companies in the survey, based on interviews with 250 customers of each company in the study. Qwest's score of 62 was below three other "Baby Bell" companies and the "all others" category for local phone service, but its improvement from its 2002 score was deemed to be "somewhat rare" in the index's decade-long history.
Another gauge of overall customer service also reflects improvement. The number of customer complaints about Qwest received by the Utah Public Service Commission totaled 44 in April, down 42 percent from the same month last year. Overall totals are on a downward trend since the April-through-August period last year and down from high totals in the 1999-through-2001 time frame.
"Based on my participation in meetings over the last six to eight months, the information I've received seems to confirm that held orders are down, complaints are down, i.e. customer service seems to be improved," said Dan Gimble, chief of the technical staff for the Utah Committee of Consumer Services. "Whether they've turned the corner for good remains to be seen, but there has been marked improvement over the past year."
Jeff Fox, utility analyst for the Crossroads Urban Center and a harsh Qwest critic, nonetheless points out that the company still needs to improve in some areas, including lessening "slamming," which is illegally transferring customers from other companies to Qwest, and having high bills.
He said figures from 2001 show Qwest had an estimated return on equity of "tens of millions of dollars" higher than what would have been allowed by Utah regulators under "rate of return" regulation. And he worries that Qwest's attempts to get pricing flexibility — freedom from regulated rates — might become too broad.
"Basically, Utah is a cash cow for Qwest," Fox said. "It has served them well. It's been an open bucket from which they've been able to fund additional projects outside Utah."
Fox also is troubled by Qwest's agreements with other telecom companies that were made while Qwest was going through the process to obtain long-distance approval from the FCC. Those deals were not reported to the Public Service Commission until they came to light in other states. Fox believes the deals amounted to payment for silence through the approval process, and "Utah's regulatory agencies have failed to take any action whatsoever."
More complaints
He also thinks the state's consumers fell short financially of what they could have received when Qwest sold its QwestDex Yellow Pages unit.
"I'm suggesting that they've gotten away with a considerable amount in Utah because the regulatory agencies are weak in terms of regulating them and ensuring the public's interest is respected, both in terms of the sale of QwestDex and an investigation of the questionable contracts," he said.
Further proof of the company's woes, he said, lie in the fact that Qwest and two of its subsidiaries were the subject of a complaint filed in October by the state Division of Consumer Protection. The agency alleged a slew of bad acts and deceptive practices that violated the Consumer Sales Practices Act, the Unfair Practices Act, the Telephone Fraud Prevention Act and the Truth in Advertising Act or involved ignoring "do not call" requests from customers or committing troublesome consumer transactions.
Consumer activist Claire Geddes said she was unsure if the company's service to consumers had improved much over the past year or so. "I don't know if they've turned that around or not," she said. "It seems odd they'd have a turnaround that fast."
But network service is "leaps and bounds" improved over US WEST days, according to Dunne.
"Held orders was such a big bugaboo. I don't think there are any in this state, and there used to be hundreds and hundreds and hundreds of people who just couldn't get primary-line service. That's certainly gotten a lot better," he said.
Better morale
Those stats and sweeping changes in the corporate culture have occurred since Richard Notebaert took over as chairman and chief executive officer last year.
"I've seen a real improvement in morale since the new CEO came in," Riggs said. "It became clear to us internally that because of some of the issues, like the (financial) restatements, we were going to make sure that our house was in order going forward and that Wall Street had confidence in our ability to conduct our operations, raise capital, get out of debt and so forth. And the increase in morale sort of came with the improving news of how we're doing."
Notebaert, he said, measures morale by how well Qwest shirts are selling at the company store. "They're selling now because people like to wear that logo," Riggs said.
Notebaert, who has received praise from analysts and others for his reworking of the company, also has stressed that customer care is the company's top priority. "Then he brought with them a team that said, 'Here's what we're going to do about it.' They set out this plan to get there, and that was what made the difference," he said.
Among the results, Dunne said, is that the company has reduced the number of transfers a caller faces when contacting Qwest and has scaled back from telemarketing.
On the local front, the company is responding to increased competition by asking the Public Service Commission to remove some regulatory pricing handcuffs. Qwest has been seeking, and will continue to seek, pricing freedom for phone service without state regulators' approval in areas where Qwest has competition.
The move toward pricing flexibility makes sense, officials said, because it allows Qwest to respond to competition that's making headway in a less-regulated market rather than having to stick to rates set by regulators.
"The pricing flexibility process will get more service out from under the tariff and therefore be able to attack the competition better," Riggs said.
One such effort was mostly successful earlier this year. More attempts will come with time.
"We'll probably take another bite of that apple and show additional competition from the likes of MCI, McLeod, perhaps wireless," he said. "So the flexibility efforts are ongoing, which means we have to show there is competition, which is a good thing for consumers, but for us, it means we have to work harder and keep customers."
E-mail: bwallace@desnews.com