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Qwest deregulation plea draws fire

By Jeff Smith, Rocky Mountain News (Contact)

Published July 16, 2008 at 9:05 p.m.

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Residential and business price hikes undermine Qwest's plea for deregulation in the metro area, the Colorado Office of Consumer Counsel argued this week.

"They argue there is an effectively competitive market here in the Denver (area), yet at the same time . . . they're requesting for all kinds of rate increases," said Jim Greenwood, director of the Colorado Office of Consumer Counsel.

Qwest Communications has asked the Federal Communications Commission for wholesale rate relief in Denver, Phoenix, Minneapolis and Seattle, saying robust competition exists in those markets. The Denver telco added in a July 3 letter to the FCC that competition acts to "discipline" rate increases.

The state's consumer watchdog group reacted strongly to that argument in a letter to the FCC on Tuesday reiterating its opposition to Qwest's petition.

"The bottom line, quite simply, is that the alleged 'sufficient' competition is not currently constraining Qwest from raising rates in the Denver (area)," wrote Gregory Bunker, assistant attorney general for Colorado.

The FCC has to decide on Qwest's petition by July 26. The current wholesale rate structure enables other telcos to lease pieces of Qwest's network at set prices so they can offer competitive services.

Steve Davis, Qwest's senior vice president of public policy, said, "Prices in communications services over the last 10 years have been either down or flat."

Davis added that even in a competitive market, "sometimes prices do increase" as a result of inflation, a company's revenue picture, and the overall cost of doing business.

Telco's price hikes

* Monday, Qwest gave notice it will increase price caps for selected business products and services effective Aug. 15.

* July 1, Qwest raised the rates of 44 a la carte services and products - such as caller ID and call forwarding - by 7 percent to 28 percent.

* Earlier this year, Qwest increased some Internet services by as much as 11 percent, and supported legislation that would have allowed the telco to hike the basic residential phone rate by as much as 32 percent. Lawmakers didn't go for the rate hike, but the basic rate will be reviewed by state regulators.