Measuring multidimensional performance attributes: Method and application to measurement of service quality of local telephone companies

Evaluation of service providers is critical in ensuring effective policymaking and fair markets. However, measurement of performance heterogeneity remains a daunting quest for policy and decision makers. Multiple stakeholders interact in the service industry---the provider, the consumer and the regulator. Firms perform according to changing markets emanating from technological advancements, consumer needs and regulatory policy. Policies evolve in response to market forces and regulatory needs. Ideally, within this interdependent world of regulation, competition and service provision, policies should evolve to meet provider and consumer expectations; and firms should perform to meet consumer needs within regulatory constraints.; This research focuses on local telephone service quality, a multidimensional, time-dependent attribute, where asymmetrical expectations exist among multiple stakeholders. The literature on measuring service quality across multiple attributes is substantial but lacks specificity with regard to stakeholders---Incumbent Local Exchange Carrier (ILEC), the consumer and the regulator. The research question is: in a regulated industry such as the local telephone industry, how can service quality be measured as a performance attribute when affected and influenced by different interests of multiple stakeholders?; The objectives were: (1) examine the multidimensional performance measures of ILECs over time to assess the effects of regulatory action and competition on service quality throughout the industry, (2) evaluate service quality of ILECs as perceived by service providers, consumers and regulators and (3) offer a framework and method based on Data Envelopment Analysis (DEA) in measuring performance attributes of homogenous operating units on a industry and individual unit-level.; The method is able to measure relative performance attributes among multiple stakeholders with respect to: (1) relative quality performance, orientation and cohesion within the industry and (2) performance on individual levels. This method was applied to measurement of service quality in the local telephone service industry, using the diverse criteria of the ILEC, the consumer and the regulator between 1994 and 2001. The results suggest that service quality is indeed different as measured by criteria of different stakeholders. Over time, the ILEC industry performs better along the ILEC-Consumer plane, balanced between these stakeholders and increasingly cohesive. On the ILEC-Regulator plane, the ILECs show similar trends but tend to be oriented more towards the ILEC's (self) interests than those of the regulator. These results suggest some effects of the ongoing regulatory reform (such as the 1996 Telecom Act) and also new competitive technologies, on local phone service quality provision. Finally, all ILECs were individually ranked to show their performance over this period.; This study introduces a new framework and method for defining multidimensional performance attributes of service quality in regulated industries. The method is generalizable to situations involving any number of stakeholders and performance attributes. Further, the method is capable of broad industry-level analysis, as well as more focused analysis at the unit-level.