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Qwest: Alter rate formula

But PUC wary of phone bill hike

By Jeff Smith, Rocky Mountain News (Contact)

Published April 2, 2008 at 12:05 a.m.

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Qwest Communications wants the flexibility to increase basic residential telephone service in Colorado, saying the current $14.88 monthly rate is kept artificially low.

But state regulators are resisting, saying Qwest's proposal would allow the rate to increase by as much as 30 percent to $19.61 a month.

Colorado is one of only two states that cap rates by statute. In Colorado, the rate is tied to inflation, but hikes are offset by increases in telecom industry productivity.

Chuck Ward, Qwest's Colorado president, said Tuesday the formula has "distorted and constrained" the company at a time of increasing competition.

Qwest has drafted an amendment that would eliminate the productivity offset and allow basic rates to increase by as much as the wholesale inflation index. As a sweetener, Qwest would invest half of any extra revenue into high-speed Internet services in unserved areas of Colorado.

Sen. Lois Tochtrop, D-Thornton, confirmed that she plans to introduce an amendment authorizing the rate flexibility to current legislation that would reauthorize the Colorado Public Utilities Commission until 2019. HB 1227 passed the House and has been assigned to the Senate Business, Labor and Technology Committee.

In addition to giving Qwest greater price flexibility, Tochtrop said, "the purpose of this is to help get broadband in rural areas."

But PUC Director Doug Dean said the provision would be a "raw deal" for consumers. He said the national average for basic service is $16.11 a month. Under Qwest's proposal, Dean said, Qwest rates could increase to as much as $19.61 a month because the provision would be retroactive to 1995.

Ward responded: "We would price based on the market, which might be nothing (in terms of an increase), which might be as much as $19.61."

smithje@RockyMountainNews.com or 303-954-5155