Qwest prepares to go the distance
• The telecom giant is pursuing plans to offer long-distance service in Oregon
By this time next year, Qwest ads promoting its new long-distance services could inundate the region's radio and television airwaves.
Yet before it can sell those services, the $20 billion telecom company must satisfy demands from its competitors, pay billions to develop and market new systems and prepare to face, if it's possible, even more scrutiny.
The payoff, though, could be huge: Analysts say investors could reap tidy rewards from the company's efforts. And consumers will benefit, Qwest says, because the increased competition will bring better service.
'We hope to get between 25 and 30 percent of the market share in our first year,' said Judy Peppler, Qwest's vice president for law and policy in Oregon.
Qwest hopes to file its official Oregon long-distance request with the Federal Communications Commission by June. It will take at least 90 days for the FCC to approve or reject the request.
To re-enter the long-distance markets in its 14-state service area, Qwest must complete the so-called '271' process. The exercise is named after a section in the Telecommunications Act of 1996. The act forced the country's Regional Bell Operating Cos., including the former US West, to divest their long-distance services.
Section 271 of the act allows the local phone service providers to again offer long-distance services after clearing several formidable hurdles.
As competitors and regulators see it, the complex series of re-entry rules ensures that Qwest, which dominates Oregon's local phone lines, doesn't dominate the state's long-distance market.
Qwest must thus guarantee that its networks, meaning the lines and operating systems through which other companies can offer services, remain available to other providers.
What's unclear is how Qwest's re-entry into long distance will affect Oregon's phone users. Qwest insists that the new competition will lower prices and force everyone to develop cutting-edge telecom services.
Conversely, the company's rivals fret that Qwest could actually control all telecom services within the state.
To offer long-distance services in Oregon, Qwest's plan must pass muster at several Oregon Public Utility Commission 'workshops' before state regulators agree that the company can apply for FCC long-distance approval. In the workshops, Qwest must meet the requirements of a 14-point checklist before it can apply to the FCC.
The catch is that Qwest's competitors, including AT&T and MCI, essentially get to dictate whether Qwest makes the grade on points it needs to complete the workshops.
If no agreement is reached, an administrative law judge must resolve the conflicts.
All sides Ñ Qwest, its competitors and state regulators Ñ agree that the company has passed most hurdles on the 14-point checklist. It has promised that competitors can connect to existing local networks and has agreed to allow competitors to assign and distribute telephone numbers to their own customers.
From there, no one can agree on what requirements Qwest has met.
Qwest said it has satisfied 13 of the 14 checklist items; its main would-be Oregon long-distance competitors say otherwise. Carolyn Berthelette, a Denver-based MCI spokeswoman, maintains the number is closer to eight.
Phil Nyegaard, telecommunications administrator for the utility commission, said the actual number falls somewhere in between.
Better service promised
Qwest is operating under the assumption that it will earn both utility commission and federal approval. If it does, consumers can expect several things.
One, Qwest maintains, is better service and another is more competition.
'If we aren't providing good service Ñ and we've had our ups and downs on service Ñ we'll have customers making their decisions to buy elsewhere,' Peppler said. 'With more competition, you have to provide better service.'
Or provide better prices. Because it sells services in high volumes, Qwest's leaders thinks their Oregon long-distance customers could save around $90 million annually. That averages to $80 a year for residential customers using Qwest's local and long-distance services. Small businesses would save $52 a year.
Qwest's rivals aren't buying the arguments. AT&T spokeswoman Kieren Porter dismissed the competition theories, noting, 'Qwest might say there needs to be more competition in long distance, yet most consumers can already name five long-distance companies off the top of their heads. Another competitor probably wouldn't make a huge difference.'
In the end, the main concern is that Qwest could hold a serious telecom monopoly.
'We're afraid that Qwest will be able to leverage its relationship with existing local phone service customers into long-distance business,' said MCI's Berthelette. 'Verizon signed up more than a million new customers in New York within a year (of earning approval there). SBC signed up that many in three months in Texas.
'By contrast, it took Sprint 15 years to sign up a million customers.'
The one thing on which all sides agree, though, is that with 2,700 employees working to reinstall Qwest's long-distance services, the company must somehow recoup its time and money investments.
Which means lots and lots of ads.
'In Oregon, it'll be a big marketing blitz,' Peppler promised.