Hell's Bells: A Radio History of the Telephone; No. 4

We didn't visualize, I don't think what it actually ended up being that continue, we need to make the change personally. That's a big shift for a lot of us. They want to be like, oh, fine, we'll say this package and you would get four or five different services and limited time until we get your bill. It's a big deal for all of us. So they were pushing services and they were confusing the hell out of people when they were buying telephone service on what was basic service and what enhanced services. Hell's Bells. A radio history of the telephone. In 1982, an agreement signed between AT&T and the Department of Justice would eventually break up the largest corporation in the world

divestiture, Southwestern Bell, an independent company no longer part of Ma Bell and her bell system. I don't think we realized what it meant. Divestiture, you know, the impact it would have on all of us and the company and the society that we live in 100 years of tradition. What can you do? Joan Moore is a union representative for the Communications Workers of America. She began her long career with what was then Pacific Telephone as a directory assistance operator and later became one of the very first women to climb poles as a maintenance technician. You know, we used to go out and fix telephones and the customer were install telephones. The customer wasn't charged a dime. We could spend all day to put in a telephone, wouldn't cost him anything. Then it went up to seven dollars and customers were outraged when it went up to 20 dollars. I thought, oh, boy, I don't know if they're going to take this. Now we find out that, my God, this is just going to split off. And eventually these customers are going to actually have to pay the actual cost of my

time for fixing their telephone. And it was really I think it was a bigger shock to the customers for us to come in and say, well, now you're going to be charged, is going down, down, down. The rates are going up, up, up, up. Breaking up is hard. You know, Jay. Literally, I've gotten used to my BlackBerry when they. Yes, breaking up is hard on you when AT&T spun off its local exchanges into seven regional holding companies, the services, the technical systems, the billing, everything had to be set up to operate in a new way. Planners said it was like disassembling a Boeing 747 in mid-flight, then reassembling the pieces into smaller 727 without crashing any of the eight aircraft and without the passengers noticing anything unusual

about their flight. It was a tremendous change because my husband and I no longer work for the same company. He went with AT&T. I went with PAC Bell and he really didn't have a choice because he was as a systems technician. That means that he works on multiline sets and I still worked residence work. So, you know, AT&T took the cream of the business when they left because that was a high profit into the business. And of course, Pacific Bell, what became Pacific Bell stayed with the residence orders, which were the low end of the business. You know, we had heard a lot of rumors that, well, you know, they're talking about selling Pacific Telephone and a couple of other companies and maybe getting rid of Western Electric. But we didn't visualize, I don't think, what it actually ended up being in terms of, you know, losing our internal capability as well as our interstate capability.

Kathy Blankenship is a marketing director at Pacific Bell. One of the local Bell operating companies divested in the breakup. In fact, that was, you know, the big question after the divestiture was announced is, OK, how do we comply with the decree? And of course, the local companies were left with the job of creating these Latisse that had to be local access and transport areas. They had to be created and there was a lot of work around. OK, how about one big ladha for all of California? Well, that was good. Well, how about two? You know, what's what's the right number of Latisse to create? Ultimately, California ended up with 10. Latisse less populated states have as few as one. Ladha calls within Alata were to be carried by the monopoly local carrier, either an independent or one of the new baby bells. Every call that crossed one of these new boundaries would be carried by one of the

competing long distance carriers. People were jumping all over each other to get to AT&T. They were absolutely convinced that AT&T was going to be a success and the Pacific Bell was going to fall flat on its. But because everybody knows the U.S. is the toughest in the country and that pack Pacific Telephone was the bad boy of the bell system because of the strictness of the PUC in California and that they were the bottom of the heap and profits and they just couldn't make it. And everybody knew that if you wanted employment security, you better go to AT&T. Well, it turned out just the opposite because, you know, since the divestiture nationwide, 125 thousand jobs have been lost and all of them in AT&T. But it was a tremendous change for all of us. And all of a sudden there was a different we were working for different companies. The attitudes were different. The systems instruction books that I told you filled a whole room, but we were no longer a system any more.

So when people say, well, you're in violation of XYZ 24, hey, there is no ESSI 24, they say in a system anymore. And nobody knew how to handle that. I mean, this was a military Catholic Church organization and all of a sudden somebody took the mother away, you know, so what are we going to do? You know? So there was really a lack of direction. I mean, you know, everybody knew how to act when you rebell system and fly because, you know, that whole thing. But now you no longer bell system employee. And AT&T was out for profits. No one in customer came second. And, you know, it was just an incredible change in attitude. And how we felt about it was the night before divestiture. The party had started, yet the celebration was a little half hearted. Would our customers continue to be receiving the best or would they try to call their neighbors and get Budapest's? Well, I think that that concern was real when it was being raised, and I think

there was probably even a time that that concern was being lived out. Bob Clark is a vice president of sales and marketing for AT&T. I can remember a time when somebody had something go wrong in their service and there would be a lot of finger pointing. And all it was, was it on this side of the network or on that side of the network? And where did the where did the fault lie? And not a lot of clarity sometimes between companies who once maybe were brothers and sisters and now might have been in a different arrangement. And so I think that that did happen for a while. But one of the things that a competitive marketplace and in this particular industry, I think it's really helped everybody a lot, is that you do come to the realization that the only way you can compete is you've got to compete on quality. And the minute you come to that conclusion that you've got to compete on quality, then all of a sudden the customer becomes more important than they've ever been.

Quick example. Ten years ago, we might have measured the kind of service that we gave to a customer in a measure that said, well, if 95 percent of it was good, that was good enough today. Unless 100 percent of it is good, it still isn't good enough. And I think the whole focus in a competitive market on quality is been one of the major learnings that I've personally gone through and I've seen our company go through again. I do think there was that time when we may have lost a little bit of side of that, and we were probably doing a lot of our own finger pointing, you know, to kind of anybody else to deflect what the problem was. From day one, AT&T was competing head to head with other equipment manufacturers such as Northern Telecom, and fought bitterly on the long distance side with MCI and Sprint. AT&T realized immediately that it must slimmed down and become more in tune with the market. The Bell operating companies caught some of this spirit, too.

Although they were still Monopoly providers, they were losing many of their largest business and institutional customers. And they knew that eventually there would be competition for local toll service within the latter's each. In its own way, the Bell companies struggled to reinvent themselves like insecure teenagers, endlessly combing their hair in the mirror. They yearned to be more than just plain old monopoly phone companies, and sometimes along the way they got into some pretty serious trouble. Audrey Krauss is director of Turn, a consumer group which carefully monitors utilities in California. Well, several years ago in California, we had an incidents in which our largest local telephone company, Pacific Bell, engaged in abusive marketing practices in an effort to get more of their customers to sign up for optional high cost services such as call waiting telephone company service representatives were encouraged to simply sign people

up, whether they wanted the service or not. They were essentially given quotas. Pressure was put on them to get people signed up for these services. They would say, would you like call waiting? Fine, we'll say this package and you would get four or five different services and they wouldn't tell you until you got your bill that you were being billed for all of them. So, I mean, it was really kind of a fraudulent way to sell a product. A lot of refugee community people and non English speaking people were victimized by it, primarily because they were less familiar with our phone system and what their rights were and what to expect. If you're newly arrived in California from a foreign country and you talk to somebody who says your telephone service will cost you fifteen dollars a month, you don't question it because you don't know that it used to cost eight dollars a month. I actually had a service representative attempt to sell me one of these packages when I had changed residences during this period of time.

And because I had phone service previously when this service representative said to me, that will cost you seventeen dollars a month, a red light went off in my head and I said, wait a minute, I thought telephone service was somewhere around eight dollars a month. And the representative said, Oh, well, yes, but that's if you don't have this and you don't have that and you don't have this other thing. And I said, well, I don't want those. I don't need them. And so I got phone service at eight dollars and 35 cents a month. But for somebody who's just newly arrived here, who's not familiar with English as their primary language, they're not likely to question that. So there was a disproportionate number of victims of this abuse in. California's refugee community and non English speaking community are also among the elderly who were somewhat confused. This was documented in the record of the hearings that took place on this case. So it clearly means that a lot more education

and consumer education in particular has to be done. So that particularly newly arrived people in non English speaking people and others who are not so sophisticated about the phone system are better informed of what they can get and at what price. Another big problem in the marketing abuse was that many people were not aware that they were eligible for Lifeline phone service at a discounted rate. And so many people who could have had low cost phone service didn't in fact know about it and sign up for it. Marketing representatives or service representatives, we call them. They've always been around. But, you know, they began to say, you know, this really isn't fair to the customer because we're telling him one thing and selling them more than they expect to get. And when they get their bills, they're not happy, you know. And they complained about it to management, weaken the union, went to management and complained about it and said, you know, this is really not an ethical thing to do.

And they said, oh, yeah, we I mean, you know, they had a whole script that our people said to the customer. And of course, they had to go along with the script. And it was later that they really got into big trouble over that issue. And I understand that some high management people were really penalized or lost their jobs or moved or anything. We don't know. They don't share those kinds of things with us. I had that case. I was assigned I was the lead commissioner on that particular case during divestiture. Don Viall was a commissioner on the California Public Utilities Commission. The state regulatory body, Pacific Bell, was being pushed to be more competitive. And they wanted to sell. They were losing their revenue sources and they were finding ways. You know, if you look at it from from their point of view, they were trying to find revenue sources to maintain that Sadullah say that low rate, that eight, seven dollar rate, they were trying to find new revenue sources. So they were pushing services and they were confusing the hell out of people on

when they were buying telephone service on what was basic service and what were enhanced services. And it got pretty bad. You know, this was this get right down to their public trust and how they were exercising the public trust. When this was uncovered, Pacific Bell was ordered to cease and desist from this practice and was fined sixteen and a half million dollars of its shareholders money in an effort to make. The company aware that this was wrong and get them to stop doing it, but we knew all along that we'd never be able to reach all the consumers that have been hurt by this flouting of the public trust. So we we simply developed the concept that since we can't redistribute the money that they improperly got, let's put it in the trust fund and let's put it in a trust fund, being mindful that this is only the tip of the iceberg, that this is only the beginning of competition,

and that as competition moves into the telecommunications industry, we're likely to see more of the market forces at play and the potential here for the exploitation of consumers who have been traditionally dependent on the public trust. The telephone company are now going to need to understand what it is when market forces come to play and when new services are developed and what the problems are. So we put this money in a pot and said that's administered to it through a trust to help consumers educate themselves on what it means to move into a market oriented system of developing telecommunications. The Telecommunications Education Trust was established to invest sixteen point five dollars million of Pacific Bell shareholder money in projects to promote consumer education and understanding of the telephone system. Since 1989, the Independent Trust has funded over 125 grants for projects in a variety of languages and media.

Technology isn't combination. The telephone and El Nuevo Opera. I thought you phone customers weren't the only ones struggling to adjust to the new environment. The phone company employees themselves were in dire need of retraining. Many had never worked for another company, and their tradition bound bureaucratic ways would only drag the company under in this new high stakes environment. The company sent its managers to a mental boot camp to think about thinking to undo old bureaucratic habits and learn a new brand of teamwork. The program was officially called Leadership Development, but the employees called it Crohn after the consultant who developed the system, John Moore of the Communications Workers of America 85, I guess it was the company came out with what they called a business labor partnership. And what they said is we're going we're going to create a partnership between the company, the union and the workers. And we are all going to have a say in how this business goes and that we are going to get together through this process, which they call leadership

development, which was what kind of a problem solving type forum. And it was very democratic, incidentally. In fact, there would be workers, they'd be managers, there'd be even company executives in this meeting. And then we would problem solve an issue that had to do with customer service, that had to do with all kinds of things. And there was a whole process. You went through what they called a task cycle, which really made you think through problems in ways that you'd never thought before, levels of force cuts, strategy to Sominex, audit levels of thought. I did live through leadership development as well, and that was an interesting time period for a lot of us. I think it had its roots in a reasonable kind of framework that said that there are certain kinds of behavior and organization and planning and thought processes that

you could utilize in a large organization more to gain alignment around such a task that would need to be done. I think the mistake that was made is the company didn't present it as a choice. The company presented it as more of a mandate. This is a way you will think. And I think that when you have a diverse culture of people, certainly in an organization as large as Pacific Bell, if you if you don't really respond to criticism and restraints, which is a leadership development word, which is, I think, a very polite term, ineffective, then you don't bring in any in any real integration what you have or people who feel more oppressed

than involved. And there was some resistance, especially from the line management, the first second line managers, because they were used to being in control. Now, we had workers sitting next to them in the in the in the room. And there is. Executive officers listening to them with just as much attentiveness and sometimes even more impressed with the role they had to say than what their boss had to say. I think that the non-salaried people really valued the opportunity that it did put people on equal footing. It allowed, you know, say Splicer to tell a district level, which would be two or three levels above him or her what they thought without fear of reprisal, because it really opened up paths of communication. And I said, hey, this is the future of the labor movement. It's the future of labor relations. It had to be they couldn't possibly back down now because

if they did, they would, you know, I mean, they were making tremendous profits. Everything was going well. They had labor peace. They had increased productivity. There was no I mean, people had never felt as good about the company as they did then, even in the old days. And Ma Bell, they didn't feel that good. That was the one year that they didn't have any kind of a threatened strike. Wasn't correct. In 86, we settled early and we got tremendous improvements. We got a no layoff clause. And this is in a time when technology was taking a great deal of our work and we got a no layoff clause, the one and only time and the only one in the country. And it lasted that one three year a time. Well, that surely was the end of leadership development because those bosses went to the media first. They started with the Chronicle and then they went to 60 Minutes and it hit the the pages. They said they were being brainwashed by this esoteric metaphysical type of program, that they was trying to brainwash

PAC Bell workers. Well, that's Horse Puckett's. It had nothing to do with that. I'm afraid we threw the baby out with the bathwater because a lot of the discipline that leadership development brought to things like, OK, how do you think about a problem? How do you organize around solving a problem? How do you make sure that you're dealing with a problem and respecting other people's views in that process and and really kind of being more thoughtful? I think we're lost because of an overwhelming antagonism about how it was introduced in many organizations. It wasn't an edict that said no more leadership development, but I think it did die in terms of a death of sorts. In 1989, the business partnership just crumbled. It just first of all, the leadership development went down in flames. And if it was an inside job from the management team that really felt threatened by it, I

have absolutely convinced of that. And then as a result, then they came back with a vengeance, these managers who now again had control and they were going to get even for the things you said in those meetings earlier, and they began even tightening the control that they had had before. And now it's even more tightly controlled and there was less respect in the workforce than there had ever been. So not only did we lose the business labor partnership, we stepped back a few years before, you know what I'm saying? And it really regressed in their attitudes about how they treated the workers. So not only was it a noble experiment that failed, but it was like a marriage where one partner deserted the other. It wasn't even a divorce. It was a desertion. And that strike in 1989 was the most bitter that I can remember. And my husband can remember because we felt betrayed. We felt that so-called business labor partnership.

You're nothing but a fair weather friend. You know, you get it. Got a little opposition from the media and you dropped us like a hot potato, you know, because the 60 Minutes did a story on that. And, you know, they just really hate adverse publicity and they dropped it. The PUC looked into that whole program and and were very critical of it. And but nonetheless, the relationship has never been the same. It will never be the same. And I think that because it was such an innovative process, this whole concept of kaleck, you know, cooperative labor management relations will never work in this country because we were the trial balloon Pacific Bell CWA was the trial balloon. We were a progressive company, progressive union. If it was going to work, it was going to work with us. It didn't. And now there is so much bitterness, not only here, but throughout the country as what? Because they were watching us. You know, it's hard for people to take that Japanese whole concept seriously anymore because it is bitter through layoffs, early retirement

and the recruiting of a new breed of managers. A monopoly phone companies have struggled to adjust to the new competitive environment, they're trying to be aggressive, but not so gung ho as to anger regulators and consumer watchdog groups. They wish to transform their massive corporate cultures from within to become more agile and more customer focused without alienating or confusing their tradition bound employees. But why should we care about how the phone companies are managed? Remember the service representatives earlier in the program who blew the whistle on unethical marketing practices when subsequent attempts to empower workers and open communications with upper management faltered, Pacific Bell was unequipped to deal with its next crisis, the late payments scandal. Audrey Kraus of the consumer group Turn. I think the service representatives felt that here they were being put in an awkward position. Again, it was a service representatives who had to deal on a day to day basis

with customers calling in and saying, what's going on? I'm getting a notice threatening to cut off my phone service. I paid my bill already. I've got the the return check back from the bank. You know, why are you threatening to cut off my service? These kinds of calls in the service representatives would call up the information on their computers and it would still not report that the bill had been paid. They understood that there were problems, there were internal problems with the processing in the posting of this information, and they were the ones that were stuck as a result of it, dealing with customers who were upset, who were unhappy, who in many cases had to wait 10 or 20 or more minutes on, hold on a phone to speak to them. It it took a lot of courage on their part to go forward with this. And if they had not, this problem might never have come to light. In 1993, acting on a formal complaint from TURN, the California Public Utilities Commission ordered Pacific to pay fifty million dollars in refunds and

penalties that break up. But then they send six bills, do you don't say it's fake, my friend. As telephony moves even deeper into free market competition, the pressure is on for all of us to open our eyes, for consumers to be more critical, for management to be more responsive. Bob Clark of AT&T and by the way, for people like me who have to make those changes personally, that's probably been the other thing. And I have seen, as those of us who have transitioned through this time, that continuing need to make the change personally to make sure that I'm not being continually driven by what was instead of being driven by what needs to be. And that's that's a big shift for a lot of us. Hell's Bells, a radio history of the telephone, was written and produced

by Gregg McVicar of Pacific Multimedia with research by Tom Read and original theme music by Larry Council. The project director was Leo Lee. Funding was provided by the Telecommunications Education Trust, established by the California Public Utilities Commission. To order audio cassettes or written transcripts of the. Send us a fax at five one zero nine three eight twenty eight fifty. And thanks for listening. This is Western Public Radio.