ANALYSIS: Telecom PR - How Verizon and AT&T waged a PR war in PAIn the fight for control of the local Pennsylvania telecom market, a PRbattle royal has been waged. Julia Hood reports

The iconic specter of Darth Vader was bound to rise in the final

days of Pennsylvania's telecommunications battle between Verizon and

AT&T, a fight the state's publicutilities regulator capped on March 22

by ruling against splitting Verizon Pennsylvania into retail and

wholesale halves.



Defending its local empire against AT&T, Verizon used spokesman James

Earl Jones in advertising that warned of job losses and a dollars 1

billion cost to consumers should the 'structural separation' be imposed.

As AP reported following the ruling, 'His was the voice of impending

doom, punctuated by heavy breathing.'



'As I spoke with people, they would say, 'What is this all about?''

remembers Ed McGovern, director of administration for Citizens for

Pennsylvania's Future. 'They would ask, 'Why is Darth Vader working for

Verizon?''



But Jones' haunting voice was just one of several PR weapons in the most

heated and expensive legal battle in recent telecom history - one in

which lobbyists often took a backseat to grassroots campaigns by PR

front groups, letter-writing campaigns, extensive issues advertising and

a media relations program national in its scope.



It all began in 1996 - long before Verizon was even Verizon - with the

passing of the Telecommunications Act. While the legislation paved the

way for local phone competition, the emergence of real competition has

been gradual in Pennsylvania. So in 1999, the Pennsylvania Public

Utility Commission (PUC), wanting to jump-start competition, issued an

order that local provider Bell Atlantic (which became Verizon in an

August 2000 merger with GTE) split its wholesale and retail operations

into two companies.



Verizon objected and so began the legal wrangling that culminated in the

PUC's March 22 ruling requiring Verizon to undertake 'functional

structural separation,' with an insistence that it adhere to a strict

code of conduct for allowing competition to flourish in the state.



Some observers see the decision as a victory for Verizon since the

company is not - at least for now - being required to split in two.

According to a report by AP, 'When Darth Vader spoke, everyone in the

galaxy quivered and took heed. Here in PA, the 'folks in Harrisburg'

evidently did the same.'



'Folks in Harrisburg' - wording Verizon used in its advertising - is

thought to be a derogatory reference to the PUC, which could be one

reason the company has been the target of the commission's criticism. 'A

lot of the attacks Verizon made were attacks on the commission and the

commission process,' says Sonny Popowski, Pennsylvania's consumer

advocate. 'If I were a commissioner, I would take some umbrage at

that.'



On the day of its ruling, outgoing PUC chairman John Quain took the

opportunity to excoriate the company for its public campaign against

structural separation.



'Verizon has pursued an extensive, systematic campaign of misinformation

in connection with the structural separation case,' Quain said in a

statement.



He called for an investigation into Verizon's actions, with the

possibility of a penalty 'equal to the full amount spent on the campaign

of misinformation.'



Scare tactics



AT&T believes Verizon was guilty of using scare tactics, and,

ironically, that it was the company's 21,000 employees who were the main

target. 'They scared the living daylights out of them,' says Lenora

Vesio, director of PR for AT&T Pennsylvania. 'Their public rhetoric was

about job losses and higher phone bills - all-out scare tactics.'



Verizon counters that AT&T is ultimately trying to keep Verizon out of

the long-distance market. 'I think it is fair to characterize what we

were doing as truth-squad activity,' says Eric Rabe, Verizon's VP of

media relations.



In the PR battle, Verizon's truth squad has encountered plenty of

obstacles of its own. One such barrier was a coalition group formed by

AT&T. 'We started to see vicious and dishonest activities from

Pennsylvanians for Local Competition (PLC),' says Rabe, 'a group no one

had ever heard from before.'



AT&T founded the group in 1997, according to Donna Irons, its current

executive director. Verizon was warning members of the news media back

in 1999 that PLC was a front group interested only in smearing the

incumbent local provider. AP reported that Verizon spent dollars 8.6

million on lobbying and advertising between July 1999 and December 2000,

while AT&T spent dollars 5.2 million, a figure Verizon says is

misleading because it does not include the amount spent by PLC.



Vesio says AT&T's support of PLC enabled consumers who were dissatisfied

with lack of choice in their local provider to have a voice in the

debate.



'We've made no bones about supporting PLC,' she says. 'To characterize

PLC as merely a front group for AT&T is an insult to the consumers that

coalition represents. Whether AT&T is providing funding to give that

coalition a voice should not take away from the genuine concerns the

coalition represents.'



The Competitive Telecommunications Association (CompTel) also supported

AT&T's view on structural separation through ads and lobbying on behalf

of other company members who might enter the market. 'We were responding

to Verizon's misinformation,' says Terry Monroe, VP of industry and

government relations.



Verizon has used front groups of its own, too. It set up Pennsylvanians

for Total Competition (PTC), which mounted a grassroots opposition to

separation. The company even had the support of one of its regular

opponents, the Communication Workers of America. Verizon employs 11,000

CWA members, compared with AT&T's 2,000.



CWA staged a letter-writing campaign and held rallies against

separation.



'This is the first time I have been on Verizon's side in 20 years or

so,' says Vincent Maisano, a CWA VP.



And the winner is



Each side is claiming victory in PUC's final decision. AT&T calls it a

'good order' because it places Verizon 'on final warning to open its

monopoly.' In other words, if PUC does not see Verizon opening the

market to competition, the separation issue could return. 'PA still

holds structural separation over Verizon's head like a guillotine,' says

Vesio.



However, Verizon says the ruling 'rejects the concept' of

separation.



To support its openness to competition, Verizon estimates that it has

lost 40,000 local customers a month since the legal battle over

separation began. 'It certainly is an odd PR tactic to brag about loss,'

Rabe admits.



Meanwhile, structural separation of the baby Bells is an idea that may

be gaining momentum in states such as Colorado, New Jersey and

Florida.



Thus, Pennsylvania's PR dispute may be only the blueprint for future

public wrangling over local phone service. It's enough to make a Jedi

weep.



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