Qwest Settlement Agreement with Arizona Regulator Expected in Fall

The Arizona Corporation Commission is expected to vote sometime in the fall whether to approve a $20 million settlement agreement resolving allegations that Qwest Communications International Inc. cut secret agreements with rivals and failed to implement new wholesale phone rates.

Qwest reached a proposed agreement with the state utility regulator late last month.

A conference is scheduled later this week to discuss possible dates for a hearing before an administrative law judge. The judge must develop a record to support or oppose the agreement before making a recommendation to the commissioners of the ACC, according to spokeswoman Heather Murphy.

The settlement agreement would resolve an investigation into whether Qwest granted certain rivals special deals in return for not participating in a regulatory process used to determine whether the company has opened its local network to competition and should be allowed entry into the long-distance market.

Several state regulators within Qwest’s 14-state territory have launched probes into these allegations, and commissioners of the Minnesota Public Utilities Commission voted in April to fine Qwest nearly $26 million and required the regional Bell operating company to grant competitors discounts.

Qwest has appealed the fine and a decision is pending before a federal court.

The agreement also would put to rest claims that Qwest failed to implement new wholesale phone rates in Arizona within a reasonable amount of time, among related allegations.

Under the settlement agreement with the Arizona regulator, Qwest also would grant competitors up to $8.91 million in discount credits. Eschelon Telecom Inc. and McLeodUSA Inc., the phone companies who are named as receiving special terms from Qwest, are not eligible for the discounts. Qwest’s competitors also are eligible for other types of one-time credits.

In addition, the proposed agreement calls for Qwest to pay $5.2 million to the Arizona state treasurer and contribute $6 million for state-funded and educational programs and infrastructure investment.

Arizona is the only state where Qwest does not have approval to sell long-distance services within its local phone territory. A Qwest spokesman says the company plans to file with the Federal Communications Commission for long-distance authority by the first part of September.

The proposed agreement with the ACC can be found at www.cc.state.az.us/ under Hot Topics.