State Commissions Concede To Qwest-U S
West Merger, But Insist Service And Investment Records Must Improve
Telecommunications Reports TRInsight Offers State-by-State
Conditions Imposed by State Utility Commissions on Merged Company
(WASHINGTON, D.C., July 11, 2000) After nearly a year of negotiations
and regulatory scrutiny, U S WEST, Inc., and Qwest Communications International, Inc.,
finally were able to complete their merger June 30. But, more than a half-dozen state
utility commissions that reviewed the companies' merger proposals have made it clear
they'll be watching the new company closely and will be looking for improved service
quality and beefed up infrastructure investments, according to a special report issued by TRInsight.
TRInsight is a service of Telecommunications Reports International (TRI), the
leading publisher of telecom news and a unit of CCH INCORPORATED. The full report is
available on TRI's web site at www.tr.com.
"Historically, U S WEST hadn't built a strong track record impressing state
regulators on service quality and infrastructure investments, particularly in rural areas
of its 14-state operating region," said Jennifer Erschen, associate TRI editor for
online publications. "The merger proposal gave the state commissions an opportunity
to push for service improvements and broadband infrastructure commitments, and they seized
that opportunity by attaching conditions to their orders signing off on the merger."
All of the state utility commissions that reviewed the merger Arizona,
California, Colorado, Minnesota, Montana, Utah, Washington and Wyoming attached
specific conditions to their approvals. Their orders provide guidelines for the merged
company to improve service quality or boost infrastructure investments, or both. The state
commissions in Arizona and Washington specified stiff penalties the new company will face
if it doesn't comply with their conditions.
While Iowa's regulatory commission lacks authority to approve such mergers, it can
review certain utility reorganizations and disapprove those that wouldn't serve the public
interest. Iowa didn't withhold approval of the U S WEST-Qwest merger, but it did impose
its own set of performance guidelines.
Among the conditions imposed by the state regulators were:
Arizona The Arizona Corporation Commission (ACC) directed Qwest to
complete specific initiatives, such as hiring 100 new technicians, or pay a penalty equal
to twice the cost of completing the initiative. The ACC also instructed Qwest to set up a
service-quality task force and to invest a minimum of $402 million in infrastructure
modernization over the next two years.
California The California Public Utilities Commission ordered Qwest to
categorize and track each customer complaint and report to the PUC quarterly on all the
complaints it receives for two years after completing the merger.
Colorado The Colorado PUC will require independent audits of Qwest's
local network investments and maintenance programs to make certain the network is being
maintained and expanded adequately.
Iowa The Iowa Utilities Board ordered Qwest to file details of plans to
address any recurring service problems and to file monthly service-quality reports.
Minnesota Under an agreement reached by Qwest, U S WEST, the Minnesota
Office of Attorney General and the state Department of Commerce, Qwest must spend at least
$170 million over the next four years to improve local phone service quality. It also must
expand or deploy new digital subscriber line (DSL) service in dozens of unserved or
Montana Under a stipulation entered into by U S WEST, Qwest and the
states Division of Public Utilities, Qwest must resolve at least 85 percent of all
reported service problems within one day and 90 percent within two days. The company also
must invest approximately $15 million to install DSL equipment.
Washington The Washington Utilities and Transportation Commission
directed Qwest to create a "consumer bill of rights" and to meet service-quality
standards or refund customers up to $20 million a year. Qwest also must maintain U S
WESTs average $335 million annual investment in its network and invest $1 million
annually for the next three years to provide service to customers who dont have
Wyoming The Wyoming Public Service Commission directed Qwest to lay down
about 100 miles of fiber optic cable between Jackson and Evanston and to hold basic phone
rates steady until 2002.
To Obtain TRInsight
The TRInsight special report is available at no charge online at TRIs web
site: www.tr.com. Annual subscriptions to TRInsights twice-daily electronic
news reports are available. Call 1-800-822-6338 for additional information or to order.
About TRI and CCH INCORPORATED
Telecommunications Reports International, based in Washington, D.C., is the most
respected provider of telecommunications industry news and analysis. Since 1934,
executives and policy-makers have relied on TRIs comprehensive coverage and analysis
of major industry issues and events. TRI is part of the Business and Finance Group of CCH
INCORPORATED, a leading provider of tax and business law information and software.
CCH has served more than four generations of business professionals and their clients,
covering a wide range of legal and compliance topics including securities, insurance,
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Group web site can be accessed at http://business.cch.com.
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