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Colorado Regulatory Criticism of Qwest Revives Telecom
By Tom McGhee, The Denver Post

Mar. 8--A bill requiring state regulators to investigate the extent of telephone competition in Colorado was all but dead, until a report critical of Qwest revived it.

That report by Public Utilities Commission staff claims Qwest Communications made secret agreements with certain competitors and raises questions about whether the market really is open to competition.

Qwest met Federal Communications Commission requirements to open its network as part of its quest to offer long distance in its 14-state service region.

But critics, including telecom titans AT&T Corp. and MCI, say the network still isn't truly open.

Qwest's senior vice president, Steve Davis, said there is no reason for state lawmakers to consider the PUC findings when debating the bill. "Everything in this report was known at the FCC and commissions at the time they approved our long-distance entry," he said.

The bill that resurrected their findings will be heard by the House today, said its sponsor, Rep. Mike May, R-Parker.

Qwest and its competitors are wrangling for market share, and the local phone company is losing customers at a rapid clip, mostly to wireless and cable companies.

The company recently reported that total access lines in service throughout its service region last year fell to 16.21 million from 17.01 million in 2002. "There is plenty of competition," Guzman and Co. analyst Patrick Comack said.

But traditional wire-line competitors -- companies such as McLeodUSA and Boulder-based CCOM -- account for very little of the customer loss.

Davis says that is because those companies have not invested in Colorado, opting instead to piggyback on Qwest's network.

Competitors counter that they pay lease rates approved by regulators and that they bear the cost of any upgrades Qwest makes to service them.

Federal regulations require regional Bells such as Qwest to lease access on their phone lines and switches to competitors.

The rationale is that it would be too costly and would take too long to build an alternate network, which would further delay competition.

So when a customer wants to switch phone-service providers, Qwest technicians at the company's central offices disconnect and reconnect a few wires in a process that in theory takes about six minutes.

Order processing adds time to the process, so it can take several days to complete the switch, Qwest says.

But AT&T spokeswoman Kieren Porter calls that time frame a "best-case scenario." Many customers face delays of two weeks and it isn't unusual for someone to give up in the midst of the process to avoid frustration, she said.

Fred Chernow, chief executive of small carrier CCOM, said there are cases where Qwest takes longer than necessary to switch customers who are leasing expensive high-speed access lines. But he disagrees with Porter's conclusion that the company delays switching residential and small-business customers.

Most residential line switches are accomplished within three days, he said.

"This is not the problem that AT&T is painting," Chernow said. AT&T asked CCOM to support May's bill, but Chernow declined.

"We try to look at Qwest and say, 'This is our community, it can be either hostile or friendly.' We want to keep it friendly," he said.

May's legislation ran into resistance from legislators who believe it could cost Qwest too much money and who were concerned that it represented one more skirmish in an ongoing telecommunications battle between Qwest and its rivals, said Rep. Jack Pommer, D-Boulder.

Some were also put off by the confusion inherent in the web of regulations that surround telephone service, he said.

"This bill is really complicated (when) you get into technical issues. Most people look at it and say, 'Good grief, what is this about?' " Pommer said.

Qwest claims the proposed bill would result in the company's being forced to spend $1 billion or more to upgrade its network so customers who wished to move to another carrier could make the move almost instantaneously.

The bill's proponents, which include Colorado Public Interest Research Group, AARP and other organizations that represent consumers, say the legislation would only require the Public Utilities Commission to recommend changes needed to further open the market.

The company's competitors would have to help pay the cost of any necessary changes that they would benefit from, said Rex Wilmouth, CoPIRG state director.

May said the bill still faces a fight.

But reluctance to hear the legislation faded when PUC staff suggested that by giving breaks to some smaller rivals for access to Qwest's network, Qwest may have hidden from regulators the extent to which it bars competitors entry to the market.

State regulators recommended the Federal Communications Commission allow Qwest to provide interstate long-distance service -- something they might not have done had they known about the deals, the report said.

Qwest's Davis said there is no reason for lawmakers to consider the staff findings when debating the bill.

That's because they were known to the FCC and commissions when they approved Qwest's entry into long-distance, he said.

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