Tying Up the Phone Companies

In this era of modems, faxes and home offices, so many people are demanding more phone lines that sometimes there just aren’t enough to go around.

When Mike and Eva Stinson recently moved into their Orange County home, for instance, the telephone company didn’t have a single line left for them.

The Stinsons waited more than a month, relying on the kindness of neighbors and racking up $406 in cellular phone charges before a Pacific Bell crew dug up the street and installed two dozen new copper lines.

How did the Stinsons show their appreciation? They promptly asked for a second line for their computer.

So it goes these days for Pacific Bell and other phone companies across the United States that are scrambling to outrun a telecommunications avalanche.

Statewide, Pacific Bell’s network grew by about 650,000 new lines last year, shattering company records and surpassing the 1995 growth mark by about 80%. For the first time, the demand was not driven by population growth or residential development, but by the exploding popularity of extra lines.

“I’ve been here 29 years and I’ve never seen growth like this,” said Ken Poland, a manager at Pacific Bell, the state’s largest local carrier. “It’s a great problem to have, unless you’re a customer.”

Most people are well aware of the other symptoms of the mid-1990s phone frenzy: the proliferation of area codes and the occasional “brownouts” caused by the marathon sessions of Internet surfers.

But beneath it all, the nation’s phone companies are confronting a more basic problem: stringing enough copper to customers’ doors.

The logjam is greatest in towns like the Stinsons’, an upscale neighborhood in southern Orange County called Portola Hills, where spacious, two-story homes were built just a few years before Internet became a household word.

But demand is surging in neighborhoods across the country, and experts say that 1996 was just the beginning.

“We’re at the point now where we think two or three lines is a high-end home,” said Bill Davidson, a telecommunications expert and business professor at USC. “In five or 10 years, the high-end household is going to have the equivalent of 2,000 or 3,000 lines.”

The lines won’t be separate, he said, but part of a giant pipe capable of sending and receiving vast amounts of data, let alone handling a few routine calls.

New technologies that can squeeze more capacity out of copper, or send information over the airwaves, will take some of the pressure off phone companies. But the trends taking shape in California are starting to ripple across the country, Davidson said, “and there’s a lot of work to do.”

The surging demand is a mixed blessing for phone companies.

In simplest terms, extra lines mean extra revenue. It cost $3,900 to install two dozen lines on the Stinsons’ street last month.

“But all I have to have is four new customers out there and we’re paid back in a year and a half,” said Poland, who oversees Pacific Bell’s operations in Orange County.

Extra lines also present an opportunity for phone companies to gain tighter grips on their customers at a time when cable television companies, long distance carriers and others are now free to invade the local telephone business.

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“If you’ve got three lines with Pacific Bell, you may be less likely to switch carriers than if you had just one,” said Julie Kennedy, a telecommunications analyst with Goldman Sachs in San Francisco.

But, meanwhile, the workload is so heavy that a phone company risks losing customers because installation dates are missed more often, and orders--like the Stinsons’--get botched.

Pacific Bell officials insist that fewer than 1% of the company’s customers experience installation delays of more than five days and the company tries to reserve at least one primary line for each residence. But engineers who oversee installations acknowledge that longer waits and other problems are increasingly common.

“It used to be rare for engineers to get any calls from customers,” said Mike Slattery, an engineer who works in Anaheim. “But now we’re probably talking to a customer a day. The calls I’m getting are people who want service, have been waiting two or three days and are wondering what’s going on.

“There are so many different problems and so many different cables near exhaustion,” Slattery said, “that it’s almost impossible to work your way through them.”

Reinforcements are on the way. Last year, Pacific Bell hired 4,700 new employees--the most in 20 years, and the company still has about 2,500 openings. A few weeks ago, Slattery was tapped to help train about 50 new engineers.

“And I’ve just got the Orange County portion,” he said.

Pacific Bell is by far the biggest local phone company in California, with about 67% of the market. But GTE, which serves large portions of the coastline and inland desert areas, is experiencing similar growth, said spokesman Larry Cox. Last year GTE installed 86,549 new residential lines, about 130% more than in 1995.

Other telephone companies across the country are experiencing similar surges in demand for extra lines. Nynex Corp., the New York-based company that serves most of the Northeast, reported a net gain of about 600,000 lines in 1996, up 7% from a year earlier.

“Phone access lines was previously thought to be a mature market,” said Bob Varettoni, a company spokesman. “But for the past year and a half we’ve had the strongest line growth in our history.”

Still, the trend is most pronounced in California.

The state’s expanding high-tech industry continues to attract a technologically savvy work force, and surveys have shown that Californians are more likely to have computers and Internet accounts than residents of other states.

But there are other forces at work as well. The state’s economy is rebounding after a deep recession during the early 1990s. And Californians, who face notoriously long commutes, lead the nation in setting up home offices, said Jack Nilles, a telecommuting consultant based in Brentwood.

Pacific Bell said home offices accounted for about half of the company’s residential line growth in 1996.

Nationwide, the number of home office has been growing about 20% per year in recent years, Nilles said. “The percentage of telecommuters in California is about double the national average,” he added.

Demand for additional lines isn’t entirely new. Luxury homes have always had extra lines to accommodate everything from maids’ quarters to alarm systems. Armand Hammer’s Westside mansion reportedly had 500 lines.

But the real shift in today’s market is taking place in middle- and upper-middle class neighborhoods, where computer ownership is high, home offices are increasingly common and new technologies are embraced rapidly.

That would describe Brookhill Road, the cul-de-sac where the Stinsons live. Mike Stinson, an executive with Toshiba’s computer operations in Irvine, uses a second phone line to keep in touch with the office as well as other Toshiba executives in Japan.

“I bet almost everybody in my neighborhood has two lines,” Stinson said, “And some people have told me they have three or four.”

Built in the early 1990s, the street was equipped with 25 lines for 16 homes, very close to the 1.5 lines per household ratio that Pacific Bell clung to for years.

But that “extra” capacity was exhausted in recent years, and when the previous owners of the Stinsons’ house moved out last fall, the free line was inadvertently given to a neighbor who wanted an extra.

Since last year, Pacific Bell has adopted a system that determines how many lines to install in new developments largely according to the square footage of the houses being built. Two lines per household is the bare minimum.

The Stinsons’ home is 2,700 square feet, and if the neighborhood were built today, it would get at least three lines per household.

“Homes over 3,500 square feet will get four lines per unit,” Poland said. “And we recently did a tract in Corona del Mar with million-dollar lots that got 10 lines per unit.”

One of the ironies of the capacity crunch is that it was just last year that Pacific Bell abandoned midstream a multimillion-dollar project to overhaul its aging copper telephone network in Southern California with fiber optic cables.

The “advanced communication network,” as the project was dubbed, was to be broad enough to carry not only phone calls, but movies, at-home shopping and other digital services into people’s homes.

Had it been completed, it probably would have created enough capacity to carry Pacific Bell well into the next century. But the company pulled out of Los Angeles and Orange County counties to concentrate on installing fiber in the Bay Area and San Diego, where cable television companies are larger than in Los Angeles, and pose a more menacing threat.

Pac Bell said it plans to eventually resume installing fiber in Southern California. But for now, the company shores up capacity on what is essentially a system of triage, throwing more copper at each new crisis.

Company officials acknowledge they have been caught off-guard by the huge growth, but say they are doing their best to cope.

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“Our forecasters meet regularly with external economists and track all kinds of information,” said Augie Cruciotti, who oversees Pac Bell’s operations in Southern California. “But in previous years, growth was always associated with new housing starts. Now all of a sudden it’s not. This caught more than just Pacific Bell by surprise.”

In fact, even companies in the Internet business have been blindsided by its popularity. America Online, the nation’s largest online service, recently angered millions of its customers when it switched to a flat-rate payment plan and was unable to handle the surging call volume.

Pacific Bell has long been known as the most progressive of the regional telephone companies created by the breakup of AT&T; in the 1980s. But deregulation has thrown the market into turmoil, putting companies under conflicting pressures to cut costs even while expanding services.

“All the Bell companies had good years last year from an earnings perspective, but their stocks under-performed,” said Kennedy, the Goldman Sachs analyst. “But people are still concerned about competition and regulation, and I don’t think that cloud of uncertainty will lift any time in the near future.”

It’s not even certain that Pacific Bell will continue to be the Stinsons’ primary telecommunications company.

Pac Bell has sought to make amends with the Stinsons by agreeing to pay their cellular phone bill. But Mike Stinson said he is considering other coming options for his computer line, including Internet access offered by cable television companies.

Nevertheless, a month without a phone line wasn’t a complete disaster for the Stinsons.

The quiet was unsettling, but peaceful. The couple’s 8-year-old daughter gained a greater appreciation for what she was learning in school. “We’re like the pilgrims!” she exclaimed one day.

And the phone problems helped speed up a relocation ritual.

“The good side of it,” Stinson said, “is we got to know our neighbors a little faster.”

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Let There Be Lines

The proliferation of fax machines and modems has created unprecedented demand for additional phone lines. Last year, Pacific Bell installed more than half a million new lines in California, a record increase from the previous year. The statewide trend:

1992: 189,000

1993: 219,000

1994: 317,000

1995: 362,000

1996: 650,000

Local Lines

More than 40% of the new lines in the state were added in three Southern California districts. New lines installed:

Los Angeles (1): 109,703

Orange County (2): 87,491

San Diego: 72,584

(1) Includes Palmdale, Simi Valley and Ventura County

(2) Includes Riverside County and portions of San Bernardino County

Source: Pacific Telesis Group;

Researched by JANICE L. JONES / Los Angeles Times