WASHINGTON-The importance public image holds for competitive wireless carriers was highlighted last week when a major daily newspaper here-pointing to the lack of mobile-phone service in underground subways that run through some poor black and Latino neighborhoods-questioned whether Verizon Wireless was engaged in redlining despite indications that gaps in wireless subway service were due to a contract dispute.
While no evidence surfaced of redlining by Verizon-the flood of negative publicity it produced forced the carrier to declare before week’s end that it would complete work on parts of the subway without mobile-phone service even as it seeks a resolution to a contract disagreement with Metro subway officials.
While radio spectrum, phone numbers and antenna sites are critical resources for mobile-phone carriers, a firm’s standing in the community is an invaluable and intangible asset that cannot be measured in dollars and cents. It can mean the difference between success and failure in a competitive market. In that sense, what happened to Verizon in the nation’s capital could happen to any other wireless firm in any given U.S. market.
For Verizon, the hemorrhaging from this public-relations fallout had to stop. The Verizon-Metro contract fight suddenly took a back seat to the all-important matter of public image.
“No matter what happens in our negotiations, we will complete the job,” said Jim Gerace, a Verizon spokesman.
In reality, Verizon had little choice but to step forward even though it firmly believes Metro is to blame for work stoppage on mobile-phone subway service in several low-income areas of D.C. and Maryland. The public-relations damage had been done.
Within a matter of hours, while the facts were still being sorted out, angry residents lashed out at Verizon in the local media. The acting chairman of the D.C. Public Service Commission called for an investigation.
Indeed, any lingering perception that Verizon was redlining wireless service and risking the safety of subway passengers could be devastating in a marketplace that also includes AT&T Wireless Services Inc., Sprint PCS, SBC Communications Inc., Nextel Communications Inc. and VoiceStream Wireless Corp.
On April 20, after a fire broke out inside the Metro subway, the first emergency calls to the D.C. fire department came from riders using cell phones. That sparked a rescue effort by D.C. and Metro officials that was found lacking, a symptom of a larger public-safety problem in the city.
Thus, race and public safety play heavily on minds of D.C. residents who are existing or prospective buyers of mobile-phone service.
“The Williams administration supports cell-phone access in all Metro stations in the Washington metropolitan area because it’s a matter of public safety and public convenience,” said a spokeswoman for Washington Mayor Anthony Williams.
Not lost on D.C. elected officials and residents was the aggressive lobbying effort by the carrier to win approval for mobile phone towers in Rock Creek Park. While city officials, residents and environmentalists opposed the towers, lawmakers grumbled they could not get mobile phone service in Rock Creek Park.
Verizon, after a five-year fight, finally got permission to erect the towers earlier this year.
“They’ve made a business decision to not finish the work and complete the project,” said Ray Feldman, a Metro spokesman, before Verizon’s subsequent announcement that it will indeed finish mobile phone subway installations.
Verizon and Metro differ about what the contract problem, which goes back two years, entails.
Feldman said that in exchange for being the exclusive mobile phone service provider in the Metro subway system, Bell Atlantic Mobile agreed in 1993 to provide equipment for the city’s new 800 MHz public safety radio system in the subway at the same time mobile phone transmitters were installed by Metro.
In 1995, the contract was amended to require BAM to supply the entire subway system with mobile phone service.
Metro said mobile phone subway service came to a halt after BAM miscalculated expenses after reaching a $4 million financial cap.
“If they exceed the dollar amount because of design changes, that’s not Metro’s fault,” said Feldman, typifying the angry rhetoric that flew between Metro and Verizon before Verizon pledged to bring mobile phone service to low income areas of the District and suburban Maryland. Feldman said Metro is splitting the $2.2 million cost of building out the rest of the underground 800 MHz public safety radio system.
Gerace said Metro wanted antennas above ground as well as underground, something he said was not called for in the contract. Given that Metro reportedly receives 20 percent of the revenue from mobile phone subway calls, it was speculated that Metro may have wanted extra, above-ground antennas to increase the level of wireless traffic and profits that flowed from them.
Metro disputed that accusation.
The Washington Times, which broke the story last Wednesday, said it had internal Metro documents that Metro makes about $360,000 a year from mobile phone subway service.
A local Verizon official met Wednesday with Edward Meyers, acting chairman of the D.C. Public Service Commission. It appears official negotiations between Metro and Verizon are back on track. In reality, the two sides were negotiating the contract in the local media for all of last the week.
