AUGUSTA — The Public Utilities Commission this week denied approval of a proposed merger between Bell Atlantic and GTE Corp., primarily because of service problems Bell Atlantic customers in Maine have experienced over the past year.

“If Bell Atlantic presents a reasonable approach to addressing the service-related concerns, and commits as a condition of our approval to meet these conditions, we expect that the merger could be approved promptly,” the commission said in its order issued Wednesday.

In October 1998, Bell Atlantic notified the PUC of the intent of its parent, Bell Atlantic Corp., to merge with GTE.

At that time, the company claimed it was exempt from having to seek approval from the PUC for that merger. It contended the merger would have no effect on company operations in Maine, since GTE has no presence in the state, other than as an interchange reseller.

The commission declined to make a ruling, pending a review by the Department of Justice and the Federal Communications Commission on the merger’s impact on competition.

In the meantime, Bell customers in various parts of the state, and especially in the Houlton area, have experienced extensive problems with their telephone service, such as no dial tone, delayed dial tone, calls not ringing in to their destination even though the callers hear the ring, calls that ring with no one on the line, and excessive circuit-busy signals.

The company attributed the problems to congestion of its switching system caused by rapid and unexpected growth of Internet use on telephone lines intended for voice communications.

Bell Atlantic has since moved Internet service providers to larger trunk lines and had them switch to digital equipment, and has reported that the problems have been fixed.

Customers in the Houlton area still report some problems, however, which Bell Atlantic officials have attributed to sources outside their system that they have been unable to locate.

In 1997, Bell Atlantic merged with NYNEX, a factor which the PUC admits probably did not cause the recent rash of telephone problems in Maine, but may have contributed to the delays in getting them resolved.

In its reconsideration order issued Wednesday, the commission noted that, “[W]e also cannot conclude … that another merger, resulting in an approximate doubling of the size of the existing parent corporation, would not result in further deterioration in service quality. To the extent that Bell Atlantic of Maine’s small size already makes it difficult for [the company] to `get the attention’ of the Bell Atlantic managers responsible for ensuring quality service, a merger with GTE could, in theory, exacerbate the problem, because the relative size of Bell Atlantic of Maine would diminish in the much larger corporate organization.”

The PUC also again declined to rule on the company’s exemption request, still preferring to wait for the federal rulings on competition.

Rather than Bell Atlantic focusing its efforts on the exemption, the PUC suggested that the company seek merger approval from the state based on conditions related to service, reliability and quality of service.

To that end, the PUC has asked that the company file a detailed plan by Sept. 30 ensuring that:

Service installation and repair appointments will be scheduled without undue delay.

When scheduled appointments cannot be met, customers will be notified in advance.

Installations will not be scheduled by customer service personnel unless they know that sufficient facilities exist in the customers’ locations.

The company has the capability to quickly diagnose and repair anomalies.

Customers will not experience incorrect services, installations or repairs because of errors caused by one or more of the company’s automated order-processing systems.

When a serious service problem occurs, the company will make available to the PUC, on short notice, the personnel best qualified to explain the reasons for the problem and how it will be corrected.

Switches, line units and trunk lines will not become overloaded.

“The plan should leave no doubt in the minds of Bell Atlantic’s Maine ratepayers that the merger will in no way jeopardize their right to an acceptable level of telephone service,” the PUC said in its order.

The action drew praise from the Public Advocate’s Office.

“We agree that the PUC has good reason for focusing its attention on service, installation problems and the abilities of customers to complete calls consistently,” said Bill Black of the advocate’s office Friday. “We applaud the commission’s suggestion that Bell Atlantic should file a detailed plan for improving its service to Maine customers.”

Bell Atlantic on Friday maintained its commitment to provide its customers with the best possible service and its desire to have the merger approved quickly.

“Bell Atlantic shares consumer-service concerns … of our Maine customers,” said Peter Reilly, the company’s public affairs officer in Maine. “The company is interested in making its telecommunications network one of the most advanced networks anywhere.

“There are a lot of benefits that will come from a merger, including high-speed access,” he continued. “We want our customers to benefit from that as soon as possible.”