AGENDA #12

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

SUBJECT:       Report on GTE and BellSouth Customer Concerns

DATE:             July 5, 2000

The purpose of this report is to outline various citizen concerns about telephone service in Chapel Hill and to propose actions that the Council could take to address these concerns.

The attached resolution would call a public hearing on September 18 to receive citizen comment on the various calling plans within the Town and the potential value of an Extended Area Service Plan for telephone service in Chapel Hill and Durham.

BACKGROUND

On November 22, 1999, the Council received the attached petition from Stephen N. Greenberg, a resident of the Silver Creek Subdivision (Attachment 1).  Mr. Greenberg explained that GTE provided telephone service to four streets in Silver Creek, while BellSouth provided service to streets closer to East Chapel Hill High School.  Mr. Greenberg cited other differences between the two companies, including varying charges for calls within the same calling area. 

At a meeting with the Orange County Legislative Delegation on April 14, 2000, the Council reported its concerns about local telephone service.  These concerns include:

1.      Uncertainties regarding dispatch of emergency medical services through the E-911 Center.

2.      Varying costs to nearby telephone numbers.

3.      Inconsistent telephone number listings in local directories, including directory       assistance.

4.      Future local competition, including the arrival of new service providers.  

At the present time, Chapel Hill residents are served primarily by BellSouth, mostly serving the Town residents living within Orange County, and GTE, mostly serving those residents in Durham County (Attachment 2).  Neither company would provide the exact number of customers within their calling areas, claiming proprietary interests. 

When the Town annexes an area, the residents become citizens of Chapel Hill, but remain customers of their existing local telephone service carrier.  As a result, customers have been required to pay varying rates to call nearby numbers because of different service areas, providers, and telephone exchanges (Attachment 3).   

In the mid-1980s, the Regional Telephone Task Force, initiated by the Triangle J Council of Governments, appealed to the N.C. Utilities Commission for a regionwide, flat-rate calling system, referred to as “Extended Area Service.”  Although Extended Area Service did not become a reality, these discussions resulted in a new system of calling plans, which included:

1.      A 50% toll reduction for Chapel Hill GTE customers calling Raleigh.

2.      A single, Triangle white pages directory, made available to customers who request it.

The Chapel Hill Border Plan

In 1998, the N.C. Utilities Commission approved a new arrangement with GTE: the Chapel Hill Border Plan.  Under the plan, GTE customers who are: (1) located within the Chapel Hill Town limits or (2) have a Chapel Hill mailing address have two options:

1.      The TriWide Calling Plan, which allows unlimited calls to Durham numbers without a 408 prefix and to areas such as Research Triangle Park and Raleigh-Durham International Airport.  Calls to Chapel Hill, Cary, Raleigh, and other Triangle cities cost a 6-cent “hook-on” and 4.5-cent per minute rate. 

2.       The Chapel Hill Border Plan, designated with a “408” prefix.  This plan allows unlimited calls to Chapel Hill, Research Triangle Park, and Raleigh-Durham International Airport.  Calls to Durham (except 408 numbers), Cary, and Raleigh cost the 6-cent “hook-on” and 4.5 cents per minute (Attachment 4).  

Although the plan made calling Chapel Hill less expensive for those who chose the Border Plan option, some citizens have expressed concerns over costs borne by Chapel Hill residents calling between the GTE and BellSouth franchises.  This concern was particularly evident in cases where a customer without a 408 telephone number prefix would call a neighbor with such a prefix, resulting in a long-distance charge (Attachment 5).

The Town of Chapel Hill provides both BellSouth and GTE telephone numbers for callers to Town departments.  Chapel Hill residents are able to call Town government numbers as a local call.

DISCUSSION

Dispatch of Emergency Medical Services

According to Orange County E-911 Center officials, there is no indication that two competing telephone companies in two different counties create problems for emergency medical dispatch.

All calls from the Chapel Hill Town limits, whether located within Orange County or Durham County, route automatically to Orange County’s E-911 Center.   This routing is achieved through the telephone companies’ routing switch, which uses street names and numbers loaded into a database. 

When the E-911 centers are notified of an annexation by the Town of Chapel Hill, they update the telephone companies’ address databases to properly route the 911 call to Orange County.

Varying Costs to Nearby Telephone Numbers

There are cases where a Chapel Hill resident – with GTE service and without a 408 prefix – could call another Chapel Hill number and pay a long-distance charge.  The Extended Area Service plan, proposed in the 1980s, is available to provide some consistency to area telephone exchanges.

Extended Area Service (EAS) would provide unlimited, flat-rate calling service, either at the applicable local exchange rate or the applicable local rate plus an EAS increment, rather than a long-distance charge (Attachment 6).  The Extended Area Service option would eliminate the need for the Chapel Hill Border Plan, because it would provide flat-rate calling between GTE and BellSouth prefixes.   The plan would most likely include a specific area, such as Chapel Hill and Durham.

The N.C. Utilities Commission could authorize such a plan after studying the community of interest and the costs involved in establishing a flat-rate system.  The Commission would require that each telephone company poll its customers, either through a separate mailing or bill insert, with ballots that detailed the flat-rate costs that would be charged to customers.  In most cases, if 50% or more of those who vote are in favor of Extended Area Service, the Commission will approve the proposal. 

Advantages of Extended Area Service

·        Consistency: Customers would pay a flat rate and would not face the long-distance charges that they have encountered when calling a nearby home or business. 

·        Simplicity: Separate GTE listings would not be necessary, including those for Town offices.

·        Wider calling area: Extended Area Service would provide more convenience for customers who could call locations in a larger area, without the expense of a toll charge.

Disadvantages of Extended Area Service

·        Opposition from telephone companies: Representatives at the Utilities Commission predict that telephone companies would oppose the proposal of Extended Area Service, as they have in the past.  The telephone companies may see flat-rate calling as a potential loss of revenue.

·        Equity issues:  Many citizens are not affected by the Chapel Hill Border Plan, or they have already chosen the 408 prefix.  A new, flat-rate system could create higher costs for them if the Commission agrees to a higher fee than what is currently in place.  However, Extended Area Service would allow these customers to call a larger number of areas without paying the extra toll.

We believe that Extended Area Service is a feasible option for the Council to pursue.  Utilities Commission representatives recommend that the Council enlist the support of the local legislative delegation, should the Council wish to pursue Extended Area Service.  These Commission officials also believe that a smaller Extended Area Service, limited to Chapel Hill and Durham toll-free calling, is more likely to gain approval than a Triangle-wide plan.

Inconsistent Telephone Number Listings in Directories, Including Directory Assistance

According to both GTE and BellSouth representatives, Chapel Hill residents, including those in the Border Plan, are listed at no charge in the BellSouth Chapel Hill telephone directory. 

Utilities Commission records indicate that there have been cases where numbers have incorrectly been omitted from directories.  However, GTE and BellSouth have documented to the Commission that these errors have been corrected.   The Silver Creek neighbors, who were also Chapel Hill Border Plan customers, filed complaints with the Utilities Commission in December 1998 (Attachment 7).  The claimants stated that they were not included in the 1998-99 BellSouth telephone book or in Chapel Hill directory assistance.  The residents demanded relief, including immediate listing in BellSouth’s Chapel Hill directory assistance, inclusion in the BellSouth Chapel Hill telephone directory, and one year’s free telephone service.

In January 1999, BellSouth distributed a supplement to the Chapel Hill directory and corrected the errors in its directory assistance system.  The Commission concluded that there were no reasonable grounds to continue to investigate the complaints, and canceled a further hearing on the matter.

Some residents have raised concerns over inability to locate residents within Chapel Hill by using directory assistance (Attachment 8).  Some errors may occur because of the long-distance company that the caller uses –  a carrier that may not have the correct information listed in its database.   A caller who dials (919) 555-1212 will receive long-distance information from AT&T databases and not from BellSouth or GTE.      

Based on conclusions from the Utilities Commission, we believe that there is not a significant number of errors in the telephone directories and directory assistance.

Future Local Competition, Including the Arrival of New Service Providers

Telecom Act of 1996

The Telecom Act of 1996 and enactment subsequently of N.C. G.S. 62-110 (f1) allowed the Utilities Commission to certify a telephone company to provide local service – without regard to whether local service already is being provided in the territory (Attachment 9).  As a result, BellSouth and GTE may have competition for local service within Chapel Hill and other territories (Attachment 10).

However, many companies will not choose to compete locally because of the costs involved.  Such companies are more likely to target business customers before residential ones, except for large developments such as Meadowmont, where a third company, BTI, will provide local telephone service. 

Under the “universal coverage” provision of the Act, the incumbent telephone company, either BellSouth or GTE, must provide telephone service to a territory if the customer desires it.  For example, a Meadowmont resident may still default to BellSouth telephone service as the “incumbent” provider, or can opt for BTI or other companies.  If a customer requests BTI to service his or her account, BTI would then approach BellSouth, and BellSouth would lease the lines to BTI at a wholesale rate.  BellSouth would still own and maintain the telephone lines.

We believe that the development of competition in local telephone service may have a positive effect on customer costs. 

CONCLUSIONS

We believe that, of the above issues, the varying cost created by multiple calling plans is the most troubling for citizens.  We also believe that a simplified calling plan between Chapel Hill and Durham would relieve some of the problems that Town citizens have experienced.  In order to better understand the problem, we recommend a public hearing to receive citizen comment on telephone issues within the Town.  

RECOMMENDATION

That the Council approve the attached resolution calling a public hearing on September 18 to receive citizen comment on the various calling plans within the Town and the potential value of an Extended Area Service Plan for telephone service in Chapel Hill and Durham.  Following the hearing, the Council may wish to report its conclusions to the Orange County Legislative Delegation and submit a request to the North Carolina Utilities Commission.      

ATTACHMENTS

1.                  November 16, 1999 Petition from Mr. Stephen N. Greenberg (p.7).

2.                  Local Telephone Service Area Boundary, Chapel Hill Town Planning Department, June 2000 (p 8).

3.                  “Local Calling,” BellSouth Telephone Directory, Page 16 (p.9 ).

4.                  General Customer Services Tariff, December 2, 1998 (p10).

5.                  November 24, 1999 letter from Linda Convissor to Mayor Waldorf (p. 12).

6.                  Rule R9-7, “Procedures Regarding Requests for Extended Area Service” (p.13)

7.                  State of North Carolina Utilities Commission, Raleigh, Docket No. P-89, SUB 70 (p.18

8.                  October 12, 1999 memorandum from Kani Hurow to Oaks Villas Neighbors Without the 408 Chapel Hill Access Telephone Number (p.21).

9.                  North Carolina General Assembly, NCGS Chapter 62 (p.23).

10.              “Establishing Phone Service,” BellSouth Telephone Directory, Page 9 (p.25). 

A resolution calling a public hearing on September 18 to receive citizen comment on the various calling plans within the Town and the potential value of an Extended Area Service Plan for telephone service in Chapel Hill and Durham (2000-07-05/R-12)

WHEREAS,  residents of Chapel Hill are served by multiple telephone companies with varying calling plans; and

WHEREAS,  these multiple calling plans create confusion and, at times, extra costs for Chapel Hill residents who live in the Durham County portion of Chapel Hill;  and

WHEREAS, citizens have voiced concern over the confusion and cost of these plans;

NOW, THEREFORE, BE IT RESOLVED that the Council of the Town of Chapel Hill hereby calls a public hearing on September 18 to receive citizen comment on the various calling plans within the Town and the potential value of an Extended Area Service Plan for telephone service in Chapel Hill and Durham. 

This the 5^th day of July, 2000.