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Leslie Bonacum
Neil Allen

State Commissions Concede To Qwest-U S West Merger, But Insist Service And Investment Records Must Improve

Telecommunications Reports’ TRInsight Offers State-by-State Analysis of
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

"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 underserved communities.

Montana – Under a stipulation entered into by U S WEST, Qwest and the state’s 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 WEST’s average $335 million annual investment in its network and invest $1 million annually for the next three years to provide service to customers who don’t have phones.

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 TRI’s web site: Annual subscriptions to TRInsight’s twice-daily electronic news reports are available. Call 1-800-822-6338 for additional information or to order.


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 TRI’s 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, banking, telecommunications, trade regulations and government contracting. CCH is a wholly owned subsidiary of Wolters Kluwer. The CCH web site can be accessed at The CCH Business and Finance Group web site can be accessed at

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