Qwest to FCC: Forbearance opponents’ information “misleading”

Qwest Communications International Inc. claims information provided to the Federal Communications Commission by opponents of its forbearance request from the 1996 Telecommunications Act is “misleading” and “opportunistic.”

Qwest, one of the nation’s last telecom monopolies, is fighting for unregulated pricing in some of the nation’s most populous metropolitan areas, including Phoenix.

The Denver-based company is fending off fierce opposition from carrier competitors that use existing Qwest telephone line infrastructure in Phoenix, Denver, Minneapolis-St. Paul and Seattle metropolitan areas. Qwest is asking the FCC to relieve the company from language in the 1996 Act that requires incumbent local exchange carriers (ILECs) to be regulated by state agencies when charging competitive local exchange carriers (CLECs) to use its existing telephone infrastructure.

Qwest, Verizon Communications Inc., and the AT&T Corp. are the only ILECs in the U.S., the remnants of the federal government’s break up of American Telephone & Telegraph, commonly known as Ma Bell. There are about a dozen carriers in Arizona that have CLEC status, including Cox Arizona Telcom, LLC, Covad Communications Group, Integra Telecom Inc. and XO Communications.

Opponents have urged the FCC to deny Qwest’s request, using the most recent Qwest forbearance approval in Omaha, Neb. as anecdotal evidence to the competitive disadvantage for CLECs. They collectively claim that at least one telephone carrier, McLeod USA, has been forced from the city because Qwest has drastically increased its pricing.
But Qwest contends the evidence provided by opponents is misleading, especially in the Omaha decision. Qwest submitted evidence that McCleod was having problems in Omaha well before Qwest was granted forbearance, using an exchange from McCleod chief executive Royce Holland’s recent conference call between company officials and telecom analysts and investors:

“But once again, Omaha is a very small market, one that we really haven’t sold in, in two years. It’s not one — we’ve got too many other opportunities that are way underutilized with some of our large networks everywhere to put salespeople and putting them in Omaha didn’t make a lot of sense,” Holland was quoted in Qwest’s filing.

Omitted from Qwest’s evidence from the conference call, obtained from an U.S. Securities Exchange Commission report, showed the following, however:

“We filed a reconsideration petition with the FCC basically saying the forbearance didn’t work in Omaha and Qwest has not been willing to negotiate with us. So, we are asking for them to reinstate the (User-to-Network Interface) in some of the central offices there. If they don’t do that, we’ve said that we probably would pull back out of Omaha, probably stay in Council Bluffs, Iowa, because we could backhaul the traffic to Des Moines.,” Holland said, according to the SEC filing.

Qwest contested evidence provided to the FCC by the CLEC opposition in April stating the number of commercial buildings the company actually served in Phoenix, Denver, Minneapolis-St. Paul and Seattle. The numbers were derived from GeoResults, a national telecommunications research and database firm. Qwest said the results were only a “subset of the market” in the regions inspected.

“The GeoResults data excludes commercial buildings served by dark fiber, traditional cable, coaxial cable, fixed wireless broadband services, and other technologies…At best, the data presented by the (CLECs) can be viewed to be a subset of the competitive telecommunications market,” the Qwest filing stated.

Qwest’s 14-page filing exposed numerous complaints about competitors’ previous evidence. Among them were:

∙ CLEC evidence did not include commercial buildings within a reasonable distance of competitive fiber routes.

∙ CLEC evidence did not include alternative competition, including wireless broadband services, coaxial cable providers like Cox and Comcast Corp., and cellular companies.

The Qwest filing also noted a recent “cut-the-cord” study by the National Health Interview Survey, a subsidiary of the Centers for Disease Control and Prevention, which showed that between 2004 and 2007, residents trading in wired telephone service for cellular “have more than tripled and shows no signs of abating,” Qwest’s filing stated.

The NHIS study, used in a December 2007 failed forbearance request by Verizon in six northeastern markets, states that cellular telephone service has become another competitor for ILECs, Qwest’s filing stated.

“The Commission should reject the proposed changes to the standard, by rejecting the GeoResults data and fully utilizing the NHIS wireless cut-the-cord data, as it did in the Verizon MSA Forbearance Order.”

Numerous state officials are opposed to the Qwest forbearance request, including the entire Arizona Corporation Commission and Arizona state Rep. Bill Konopnicki (R-Safford). Arizona Department of Commerce director Jan Lesher has also sent an opposition letter to the FCC, but sources close to her department said she has changed her position on the matter.

Ty Young is a regularly featured contributor.  He can be reached at ty@aztechnews.net.