GTE vs. Pacific Bell - A Pricing Case Study

(or, my continuing mis-adventures with the most inept phone company in America)

(a work in progress...)

This whole thing is still dragging on, so I'm adding more sections, to detail the continuing adventures. New stuff will be added to the bottom, with links pointing there. I'm adding new things daily. Please check back! :-)


Part 1:

(An open letter to the California Public Utilities Commission,
and GTE Customer Service)

December 15, 1997

To: Public Utilities Commission
State of California
State Building
505 Van Ness Ave.
San Francisco, CA 94102

CC: GTE Customer Service
c/o GTE California
Payment Processing Ctr.
Inglewood, CA 90313-0001

Dear Sir or Madam:

This letter is written to dispute a bill tendered by GTE on November 4th, 1997, for my residence at 17418 Bear Creek Rd., Boulder Creek, CA. 95006. (See Figure 1)The bill is for the sum of $800.98

A copy of this document is available online at

I moved into the Bear Creek residence on October 1st, 1997, from a location across town, at 806 Quigg Way, Boulder Creek, CA 95006. (See Figure 2) While at Quigg, my phone service was provided by Pacific Bell, and during the move period, we discovered that the new location, while still in Boulder Creek, and only several miles away from the old house, was serviced by GTE. As a result, I had to change phone numbers for our two analog lines (voice and data) as well as our two ISDN lines.

This change in service, while an inconvenience to myself and my significant other, also seemed to be rather surprising not only to Pacific Bell (who thought that they serviced all of Boulder Creek), but also to GTE, (who thought that Pacific Bell serviced all of Boulder Creek.) About 45 minutes of discussion with various operators of both companies and directory assistance lookups to determine the service provider of the former occupants finally determined that it was, in fact, GTE who provided the service.

I described my existing setup and telecommunications needs to GTE, who were very helpful in getting me set up. I was moving a computer network from one house to the other, and would require a data line in addition to the voice line, as well as future ISDN lines (two of them). In describing their pricing structures, I noted that GTE phone rates seemed to be slightly more expensive for basic services than the Pacific Bell fees (a few dollars more, but bearable).

The data line in question was for my computer, which runs the link for my Internet domain (, where I provided network services for several users, ran a web site, and hosted several mailing lists which serviced more than 100 users. My data line connects to a data line in my friends' house at 305 McMillan Drive, Santa Cruz, CA 95060. (See Figure 3) My friends run a domain ( which services more than 1000 users, provides web services, and provides several sites such as mine with Internet connectivity.

Combining the three locations into one composite map, we arrive at (Figure 4), showing the relative positions of all three locations.

It is important to note that, in both locations, I have been dialing the same end-point in Santa Cruz, and that in my new location on Bear Creek Rd., under GTE's service area, I am actually physically closer than I was at 806 Quigg Way. (See Figure 5)

This brings us to the problem at hand...

Running a computer network requires consistent and reliable service, as does running a telecommunications network. If people were only able to get a dial tone from their phone on random occasions, and for short periods of time, they would not regard the service as very robust.

When I was using Pacific Bell to call the number in Santa Cruz, I was paying a flat-fee for the local call, and could make connections at any time of the day or night. The circuit was reliable, and usable for arbitrary lengths of time as network needs required.

Now that I've moved several miles closer to Santa Cruz, and am using GTE to call the same exact phone number, I've been told that the call is no longer a flat-rate call, but a metered "local long distance" call. When I asked GTE what the metering rate was, the answer I got was "I don't have that information, but it will be metered." I explained that I needed to use the phone line, if possible, 24 hours per day, and they advised me that I would be charged by the minute. They recommended "going light" on my usage until after I got my first bill, so that I could determine the rate. While this is hardly a good business practice, it's at least scientific, and I've now got my measurements, and calculated the results.

The Math

I wasn't sure how much my new phone rate would be, but I figured (incorrectly) that a plain old voice telephone line would be less expensive than an ISDN line, which GTE charges $.04 for the first minute, and $.01 per minute thereafter. In fact, GTE is charging me an average of 500% more for a voice line than they would for the ISDN line. Even calling my old house across town now costs me $.10 for the first minute, and then the "standard" rate of between $.04-$.07 per minute thereafter. There appears to be a "magic line" somewhere between the old and new houses where prices take a very large upswing. This is a line which I would like the Public Utilities Commission to explain to me.

As a base reference, I'm using the rate that Pacific Bell charged me for the 39 months I was at the Quigg Way address. That line cost me $12.60 per month, every month, regardless of use, to call the number on McMillan Dr. This serves as a "control" for the experimental data received in my GTE phone bill for the month of October, 1997. With any luck, that data was an anomaly. In any event, the Pacific Bell data was collected over a period of almost 3.5 years, so it serves as a handy standard to measure against.

For the purposes of this study, I have included only the phone calls made on the data line to connect to the Santa Cruz numbers. I have excluded all basic wiring charges, the cost of the line itself, taxes and surcharges (which came to just over $65 by themselves), and attendant costs of having the phone line in the house. This study looks only at the metering rates of GTE vs. a reference frame of Pacific Bell for identical services. It is hoped that the California Public Utilities Commission can provide some insight into why such gross differences exist.

Since GTE told me to "go light" on my usage of the line, until experience could provide us with a working rate, I did so. Rather than leave the link up 24 hours a day, as I had done for years with Pacific Bell, I reprogrammed my computer to only bring it up for 20 minutes or so at various intervals, and used it for longer periods (up to several hours at a stretch) on some occasions. By doing this, I cut my usage of the line to approximately 31% of normal.

Taking an average of 31 days in a month, 24 hours in a day, and 60 minutes in an hour, we arrive at 44,640 minutes in a month. Aside from minor glitches and line-drops, which my system was programmed to detect and re-dial the connection within 3 minutes of line failure, my connection at 806 Quigg Way was up for almost all of those 44,640 minutes per month. Total cost for this connectivity was $12.60/month. Always.

With the data derived from my GTE phone bill for October, 1997, I used a total of 13,754 minutes (31% of a month), for which they billed me a total (less taxes, etc.) of $650.03. Although the actual per-minute rates varied anywhere from $.04/minute up to $.10/minute, depending on duration of call and time of day, the average cost per minute was approximately $.05/minute.

Keeping in mind that GTE ISDN services average at about $.01/minute, we see our first discrepancy. ISDN, which is ostensibly a "premium" service, (and which provides 4-8 times the standard data-rate of analog phone lines), turns out to be 5 times cheaper than a GTE analog line.

At $.05/minute average, GTE's analog phone rates reach a theoretical maximum of $2232.00/month. This number might vary a bit, based on variations in the number of calls (higher first minute) or other fluctuations, but is the figure suggested from my data.

Pacific Bell, on the other hand, with a flat rate of $12.60/month, averages out to $.00028/minute, or 28/1000ths of a penny per minute, for identical service.

Taking the theoretical maximum GTE would charge in a month for me to call 305 McMillan Drive ($2232.00), and the actual maximum that Pacific Bell charged me for the same thing ($12.60), we arrive at a rather astonishing number. According to the data provided me by GTE in their phone bill, they charge 17,714% more than Pacific Bell for identical service.

In real-world terms, my Pacific Bell charges on my data line for 39 months totaled $491.40 (39*$12.60). GTE's single-month bill, costing $650.03, is thus 1.32 times, or 132%, of nearly 3.5 years of comparable service from Pacific Bell.

As an interesting aside, GTE will allow me to call San Jose as a flat rate, no-toll call, even though it is approximately 25-30 miles away from my house, although they charge me "long" distance fees to call Santa Cruz, which is between 12-15 miles away. This causes me to suspect that GTE's determination of phone rates is perhaps not based at all on distance, but on something much more arbitrary.

Dealing with GTE Customer Service

Of course, as soon as I received the bill, I called GTE Customer Service, and asked to speak to a Manager/Supervisor. I was told that the woman was required to try and help me first, before contacting a Supervisor. I explained the situation to her, gave her many of these same numbers, asking if there could possibly be some mistake, or if GTE was really charging 17,714% more than Pacific Bell for the same services. I was (politely) told that "You can't compare GTE with Pacific Bell, since they're two different companies" and that doing so would be "like comparing apples and oranges".

I then asked the woman how in the world they managed to survive in a competitive marketplace, and was again greeted with noises suggesting that GTE and Pacific Bell are of two different breeds, and are not able to be compared. (This I am beginning to believe.)

I then went back to my first request, and asked to speak to a Manger/Supervisor. I was told that said person was not at hand, but that I would get a return call from them within the next 24 hours.

I have been waiting for that call for some time between 3 and 4 weeks, now (It's mid-December as I write this) and I've pretty much given up on getting one. In the copy of this letter going to the California Public Utilities Commission will be enclosed a check for the full payment of $800.98, which I expect them to hold while investigating this matter.

It is interesting to note that since then, I have received calls from GTE Sales asking me if I'm enjoying the services in my new home so far, and would I be interested in upgrading to a new plan and adding some calling features to my lines? When I mentioned $800 phone bills and waiting to hear back from GTE, the salesperson in question seemed to suddenly not wish to be the Company Representative on the other end of the line, and quickly excused himself.

It is also interesting to note that calling other sections of GTE still works just fine. I'm able to get the same courteous and excellent service from people in the Business Office, and the Orders Department. The Data Specialists return my calls, and they are sympathetic with my situation, and have gone so far as to research other alternative services and plans that they could offer, such as leased line, centrex switching, Residential and Business ISDN plans, and even Business T1 service to my home.

All of their suggestions are cheaper than GTE Residential Analog Phone Service.

As a matter of fact, aside from the initial woman I spoke with in GTE Customer Service, every other person I've described the situation to (including other GTE employees) seems to think that there's some sort of weird billing error going on.

A Few More Comparisons

At the risk of "comparing apples and oranges", I did a bit more research to see how GTE Residential Analog Phone Service stacked up against other telecommunications services. Here's what I found:

Service Name Service Provider Cost/Month Theoretical Max Data-Rate
GTE Residential Analog Line GTE $2232 53Kbps
Pacific Bell Residential Analog Line Pacific Bell $12.60 53Kbps
GTE Residential ISDN GTE $37.90/month
$.04 - 1st minute
$.01 - Each additional minute
(depends on switch)
Pacific Bell Residential ISDN Pacific Bell $29.50/month
Day: $.04 - 1st minute
$.01 - Each additional minute
Eve/Night: first 200 hours free
(depends on switch)
GTE Business ISDN GTE $49.62/month
$.04 - 1st minute
$.01 - Each additional minute
(depends on switch)
Pacific Bell Business ISDN Pacific Bell $32.32/month
Day: $.04 - 1st minute
$.01 - Each additional minute
(depends on switch)
GTE Frame Relay GTE $180/month (each end) and up 56Kbps-45Mbps
Pacific Bell Centrex ISDN Pacific Bell $39.15/month 128Kbps
T1 Services Exodus Communications $400-450 1.544Mbps


For the moment, I am trapped behind the aforementioned "magic line" in GTE service territory, and feel that I am being unjustly and extensively charged for services that are essentially free one mile farther down the road I live on. In light of this, I have severely curtailed the use of my data line for calls to the Santa Cruz address (to roughly 2-5% of the connectivity I enjoyed just 3 months ago with Pacific Bell), and am investigating other options for securing a reliable (and affordable) data link to the Internet for my network. In the meantime, the various users I provide network and email services to are suffering through this outage, and the 100+ users around the world are getting minimal and delayed services from the mailing lists they've joined. Also, the lack of a reliable network connection is causing countless error messages and alerts to be sent around the Internet about the link to my site being down 98% of the time. I have moved my webserver off-site so that it may remain connected to the Internet. It is now on a network being reliably serviced by both Pacific Bell and Exodus Communications.

I'd like to get some answers from the Public Utilities Commission as to why the area I live in is so special that it costs 177 times more money to provide the same services as Pacific Bell gave me for nearly 3.5 years, and find out if there is perhaps some sort of error in the billing calculations for my area.

I would also appreciate info on how I could use the recently de-regulated telecommunications network to access Pacific Bell's services from my house, rather than continue to put up with the astronomical rates GTE charges. If anyone out there knows the access codes needed to dial into Pacific Bell's service area, please mail me at with details.

And finally, I would hope that the data put forth in this case study will prompt the PUC to look into the pricing practices of GTE. At least in my area, and perhaps in other areas on the "crinkly edges" of their service regions. It would seem that they are being rather arbitrary with pricing, and not basing them on anything resembling distances, or even current market rates.

I don't know that I'll get any sort of a refund, but with luck, this message will start some ripples that result in actual change, and perhaps help out others. I shudder to think of how many people are currently living in situations similar to mine, paying these rates year in and year out. Perhaps they don't use the phone as much as I do with my network link and just never noticed the rates, or perhaps they didn't have a benchmark such as I did in moving just a few miles down the road and into a new service area. In any event, that's still no excuse for such a gross discrepancy with the current market rates.

Figures and Illustrations

Map showing 17418 Bear Creek Rd., Boulder
      Creek, CA 95006
Figure 1: 17418 Bear Creek Rd.

Map showing 806 Quigg Way, Boulder Creek,
	CA 95006
Figure 2: 806 Quigg Way

Map showing 305 McMillan Dr., Santa Cruz,
	CA 95060
Figure 3: 305 McMillan Dr.

Composite Map showing all three
Figure 4: Composite map showing all three locations.

Composite Map showing all three locations,
	with lines denoting relative distances.
Figure 5: Composite map showing all three locations, with lines denoting relative distances.

Part 2:

The PUC Responds...sort of

Sometime in mid-January, 1998, I got an envelope back from the California Public Utilities Commission (PUC) with a receipt for my payment to them of $800.98. The receipt was dated January 8th, 1998, and in checking my bank records, I saw that the check was cashed by them on January 13, 1998.

There was also a note on the receipt itself, saying:

The Commission staff is reviewing the matter you have brought to our
attention. You will be informed of the results after the review has been
completed. Subsequent bills should be paid directly to the utility.
Around this same time, I received another bill from GTE. This one was for $827.83. While I wasn't enthusiastic about sending $827.83 to GTE when I was contesting their rates, I did so. Included with the receipt was a small insert, of which I will reprint what I think is the relevant bit:
Your deposit prevents the disconnection of your utility service pending the
resolution of your complaint. If your deposit is paid by personal check, and
it is returned for insufficient funds or because you have stopped payment, the
Commission may inform the utility and allow disconnection if appropriate.
Note that bit about "preventing the disconnection of your utility service". The PUC seems to think that since I paid them, GTE should not be turning off my phone service. This brings us to:

Part 3:

The Battle Continues - Our First Disconnect

At the beginning of February, 1998, our phone was disconnected.

The only number I could call was one for the GTE Billing/Disconnect office, so call I did.

It turns out that they never received my initial complaint (the above letter in Part 1), nor did they ever receive notice from the PUC that the matter was being investigated, that the PUC had received (and cashed) my check, nor did they receive the copy of the PUC receipt that I sent to them with my check for $827.83. (They apparently have some whizzy machine that opens all their mail, grabs out the checks, and throws away everything else.)

So they had record of the 2nd payment of $827.83, but not the first (to the PUC) of $800.98. Thus, the phone gets turned off. After about 1/2 hour of explaining, they issued a reconnect notice to turn on my phone service again, and it was back the next day. During this whole ordeal, the PUC has apparently never contacted GTE, and the only communication I've received from them (as of Feb 16th, 1998) is that one receipt. No calls. No other letters. Nothing.

Part 4:

Part 4 - The Battle Drags On...Our Second Disconnect

In the middle of February, about 1-2 weeks after getting the phone re-connected, I come home on the night of Feb 13th to find out phone disconnected...again. Apparently, they'd forgotten that we'd just been through this a week or so before.

After more calls, and more explainations to more people who haven't heard the story (but who note that my case-file has "an awful lot of stuff in it"), it turns out that GTE still hasn't heard a peep from the PUC. They still have no record of the payment, and insist that I must fax them a copy of the receipt from the PUC that I mailed to them a month earlier (and which their machine promptly shredded.)

So, on Valentine's Day, rather than spending a relaxing and romantic day with my girlfriend, I had to run around town, get photocopies made, and pay to fax pages to GTE that I had mailed them a month before. All told, between my copies of the reciept (again), my notes of explanation, and the copy of this document that I faxed when back in the office on Monday, I sent them about 18-20 pages of stuff.

I spoke with a very helpful woman named Sandra Covington, who took some responsibility for making sure the line was reconnected, and even gave me a call back a day or so later to let me know what was up, and to check and make sure things were working properly. To her I am very grateful. As for the rest of GTE, though, I'm not so sure...

On February 23rd, GTE sent me a note saying that they had received my correspondence, but that they have no record of payment of the $800.98, and are asking me to prove payment with a "xerographic copy of a traced money order, front and back".

Ignoring, for the moment, the fact that I didn't pay with a money order, but with a check, one wonders why the other two choices on this form letter ("xerographic copy, front and back, of your cancelled check" and "xerographic copy of your receipt") were not checked. I've sent the latter, and am going to send the former, but there's no money order to be traced...

Part 5:

Part 5 - More Fun - Our Third Disconnect (Almost)

Today, March 10, 1998, I got a note from GTE with a Temporary Disconnection Notice due to take effect on March 12th, 1998. This, if it went through, would be our third.

The phone has been working great up to this point, and my last few bills have been a very managable $76.83, and $29.98, respectively. Now there's a threat to disconnect it for a third time, even though it should not have been disconnected even once, since I'd paid the PUC and they said (above) that my payment would insure the prevention of a disconnect.

I've just gotten off the phone with a very helpful woman named Natalie in the Tucson office (I've talked to people all over America by this point, as GTE seems to randomly connect me to different Customer Service offices each time I call) and out of our 56 minute conversation, I'd say about 15-20 of it was spent talking, with the rest spent listening to their smarmy hold music with little voice-overs of people assuring me that "help is just ahead" and how much they were "looking forward to correcting my problem." To be fair, though, the first 19 minutes of hold was before I even spoke to a person, and the first person I spoke to transfered me to Natalie.

Natalie has issued some sort of command to override the pending disconnect order, and I'll know in about 2 days if it worked or not. They still have no record of payment, and keep issuing disconnects, then charging reconnect fees, and are tacking late-payment fees on top of things, as well.

One question that keeps coming up, over and over, with each new person I speak to at GTE is: "Why did you send your payment to the PUC?" And the answer I keep giving is "Because says to on the back of Page One of the bills you send me each month."

Since the people at GTE seem unfamiliar with their bills, I'm going to reprint the relevant section here, for all to see:

Please call your GTE Customer Representative at the billing inquiry number
which appears in the yellow band on your bill (Summary Page). If you are not
satisfied after receiving an explanation, please ask to speak to a supervisor
who will further investigate your request. If you still disagree, you first
must pay the undisputed amount to GTE by the due date indicated on the
bill. You must deposit the disputed amount with the Public Utilities
Commission, State of California, State Office Building, 107 South Broadway,
Los Angeles 90012 or State Building, 505 Van Ness Ave., San Francisco 94102 to 
avoid disconnection of service. Make remittance payable to the Public
Utilities Commission, State of California, and attach the bill and a statement 
supporting your belief that the bill is not correct. The Commission will
review the basis of the disputed amount and make disbursement in accordance
with its findings.
As can be seen in Part 1, I mailed to the San Francisco office, and attached all of Part 1 as my letter of complaint.

Another (slightly) humorous bit was that, in talking with one person at GTE about having sent my check to the PUC, after going through the "Why the PUC?"/"Because your bill says to" bit, as noted above, she said "Well, if you want to avoid disconnects in the future, you should pay the money directly to us, not the PUC. I then had to delicately point out that I was having their pricing policies investigated and that, were I to just pay GTE, there would be little to no action to correct the problem. (I'm still not sure there will be, at this rate.)

By this point, We've come so far astray of where we started, that it might be necessary to remind the reader that the original complaint was not about the gross ineptitude of GTE in handling a customer service issue in a timely manner, it was about pricing. I have no idea how it will all end up, as of this point in writing, but time will tell.

My next round in this game seems to be in getting a copy of the cancelled check from the bank, faxing that, and a third copy of the PUC receipt, as well as another copy of this ever-growing document, since the people at GTE seem unable to get themselves to a web browser.

Part 6:



I just got off the phone with a very nice man named Rob JeuDevine, who is a Supervisor in the 1000 Oaks, California office. He's been reviewing and investigating my complaint, and the whole issue, and has been EXTREMELY helpful in clarifying things. (This was in answer to my original request to speak to a Supervisor back in November...) He only had a version of this document detailing events through Part 3, so I've referred him back to this page to get all the most recent updates.

As with every other GTE rep I've talked to, Rob is extremely courteous, and seems eager to correct things. Unlike all the others, though, he's taken ownership of the problem, given me his direct line for calling and faxing, and seems genuinely interested in solving the issues. For this I am extremely grateful. :-) He even went to the trouble of calculating for me the cost of running a dedicated circuit back into Pac Bell territory, so that I could take advantage of their rates with a private leased line! (Definitely cheaper than $800/month, but we're moving from this location in about a month, so it's not really all that applicable. However, we're moving elsewhere in GTE territory, so we'll get to recalculate everything for the new place, and see if that's useful.)

He has also acknowledged the fact that, yes, the bill was paid to the PUC, and yes, they have the money in holding. He's apologized for the disconnects, credited my account for the various late charges and disconnect/reconnect fees, and we've talked in detail about the layout of the region I'm in, how the rate-calculations work, and why the rates I was originally complaining about are the way they are. (The rate-center that my phone routes through is very distant from me, and all calls to Santa Cruz apparently route north to the Sunnyvale/San Jose area, then 20 miles south to Santa Cruz. That 20 miles is the kicker.)

I still don't agree that the metering rates are "right", but at least it makes more sense as to how they're calculated.

More as it happens...

Part 7:

Part 7 - Many updates


Ok, I'm annoyed, again.

If I may vent for a moment (and I may, as it's my web page - *grin*), I've never seen such utter slack, worthless Customer Service, non-responsiveness, and all-around ineptitude as I have in dealing with both GTE and the California Public Utilities Commission over the past 6-8 months.

Patrick Salsbury

Last modified: Sunday, 05-Mar-2000 03:02:15 PST