Qwest hiking rates for a la carte services

By Jeff Smith, Rocky Mountain News (Contact)

Published June 9, 2008 at 8 p.m.

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Qwest Communications is raising the rates of a la carte products - such as caller ID and call forwarding - by 7 to 28 percent. The new rates take effect July 1.

In a letter to customers, Kim Whitehead, vice president of marketing, said: "Changing market conditions require that we continually evaluate our prices, product offerings and infrastructure."

Qwest spokeswoman Margaret Fogarty stressed the rate increases affect fewer than 20 percent of Qwest's customers. The rate hikes don't affect customers with a home-phone package that includes several features, she said.

Donna Jaegers, a telecommunications analyst for Janco Partners in Greenwood Village, said the price increases seem designed to convince consumers that it's more economical to order a home-phone package than buy features separately. She also said Qwest may be increasing rates to help offset the current economic weakness. The telco lowered its guidance on Monday because of the weakening economy.

Earlier this year, Qwest raised the prices of some of its Internet services by as much as 11 percent.

Qwest's letter doesn't say costs of providing the services have increased. The services "basically are software packages loaded onto the switch," Jaegers said. "The cost for any one service is very, very minimal. It's like putting (Microsoft) Word on a server that gets used by a thousand people."

Call waiting is increasing from $6 to $6.50 a month, caller ID from $7.50 to $8.50, and call forwarding from $3.50 to $4.50. In all, more than 25 residential and 19 business services are affected.

Qwest basic phone service costs $14.88 a month. A home package with the choice of three features costs $29.99 a month, while a package with up to 10 features goes for $34.99 a month.

smithje@RockyMountainNews.com or 303-954-5155

Telco lowers guidance

Qwest's revenue and earnings will fall at the lower end of this year's forecasts, Chief Executive Officer Edward Mueller said at an investor conference in New York on Monday.

Shares dropped nearly 4 percent to $4.52.

The economy, competition and customers who replace their home phones with wireless devices have hurt sales, Mueller said at a conference hosted by Deutsche Bank. Qwest's February forecast called for sales near or slightly below its $13.8 billion in 2007 revenue. It also now expects its operating earnings to be relatively flat.

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