Monday, Jun 1 1998 6:01PM ET
Reply # of 671
From the Seattle P-I - WA State challenges US West/Qwest deal
STATE CHALLENGES U S WEST'S 2-IN-1 PHONE PACKAGE
Seattle Post-Intelligencer
State utility regulators have asked a federal judge
to block U S West's new one-stop-shopping
program that lets customers make a single call to
sign up for local and long-distance phone service
and pay for both on a single bill.
The Washington Utilities and Transportation
Commission yesterday sided with long-distance
giants [ AT&T ] and [ MCI ] in asking U.S. District
Judge William Dwyer in Seattle to halt the
"Buyer's Advantage" program launched May 7 by U S West and
fiber-network provider [ Qwest Communications ] .
Participants say the case raises issues that are central to nationwide efforts to
reform the telecommunications industry. It could affect not only how much
consumers pay for local and long-distance services but also how much choice
they have in who provides those services.
U S West and Qwest call the new program a "clear win for customers" that
offers both convenience and value. But a group of plaintiffs led by AT&T and
MCI say it blatantly violates the federal Telecommunications Reform Act of
1996 and ultimately will harm consumers by postponing competition for local
phone service.
The 1996 law aimed to deregulate the telecommunications industry, in part by
letting local phone companies enter the long-distance business in return for
opening their local markets to competition.
The idea was to foster a number of companies that could offer a wide range
of services. Customers could pick different services from each, or, more
likely, choose a single provider and pay a single bill.
In convenience, it would be like the old days of the AT&T monopoly - but
with the key difference being that the customer could shop around for the best
package of price and services.
More than two years after the law was passed, however, critics say it has
largely failed to accomplish that goal.
Long-distance companies accuse local providers such as U S West of
dragging their feet in allowing competitors into their markets; local providers
say it's the long-distance companies that aren't cooperating.
With those issues unlikely to be settled any time soon, U S West formed what
it calls a "marketing alliance" with Qwest through which "customers will finally
see the true benefits of a competitive market," Qwest President Joseph
Nacchio said in announcing the program.
On Wednesday, the companies announced that 100,000 people have signed up
for the program.
"The bottom line is that customers are winning here, with greater convenience
and choice," U S West President Solomon Trujillo said.
The challengers say those claims are misleading, and call the Buyer's
Advantage program an "end run" around the reform law.
"It essentially allows them to offer long-distance service without opening up to
competition," AT&T spokesman Jim McGann said.
"U S West has no incentive now to allow any of the other providers in to
provide local service," MCI's Bill Levis said. It also puts other long-distance
providers at a disadvantage, Levis said.
"If you call U S West, you're left with the impression that U S West provides
the whole service, which discriminates against the other carriers," he said.
The alliance partners clearly expected a legal challenge.
On the same day they announced the program, the two Denver-based
companies distributed a legal analysis by the Washington, D.C., law firm
[ Wilmer, Cutler & Pickering ] stressing that U S West would not be providing
long-distance service itself, merely marketing the service of another company.
The lawyers' analysis also said the Federal Communications Commission had
approved similar arrangements in the past.
Two weeks later, however, FCC Chairman William Kennard issued a
statement that appears to dispute that conclusion.
"There have been suggestions that prior Commission precedents clearly
address these specific types of arrangements," Kennard said. "I do not believe
that is the case."
The commission has filed a brief in a similar case challenging an alliance
between Qwest and the Midwest phone provider Ameritech. The contents of
that brief could not be learned late yesterday.
The Utilities and Transportation Commission, in the brief it filed yesterday,
"agrees with AT&T that U S West's teaming up with Qwest violates the
federal act," said Glenn Blackmon, the commission's assistant
telecommunications director.
"This could really give them an incentive to keep the local market closed, so
they were the only one who could provide local service."
"U S West is right about the fact that a substantial part of the customer base
wants one-stop shopping. But that is something that AT&T and MCI simply
can't provide today, because the local markets are just not open right now."
P-I reporter Warren Wilson can be reached at 206-448-8032 or
warrenwilson@seattle-pi.com
(Copyright 1998)
_____via IntellX_____
Publication Date: June 01, 1998
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