The FCC (www.fcc.gov) ruled yesterday that the merger of Qwest Communications International Inc. (www.qwest.com) and US West Inc. (www.uswest.com) can officially go through now that Qwest plans to sell its long-distance business in the US West region to Touch America Inc. (www.in-tch.com).
Touch America is the telecom subsidiary of energy powerhouse, The Montana Power Co. (www.mtpower.com). The CLEC's growth strategy lies in broadband fiber-optic and wireless spectrum applications. Touch America is the owner, operator and developer of a 12,000-mile, high-speed, fiber-optic network that will have an 18,000-mile national presence by year's end and roughly 26,000 miles of fiber by the end of 2001.
The Qwest deal to sell off its long-distance business to Touch America is consistent with federal telecom law, the FCC unanimously ruled June 26. In March, the FCC conditionally approved the proposed merger subject to whether such a divestiture complied with Section 271 of the Telecommunications Act of 1996. Section 271 prohibits a BOC from providing long-distance services within its region until it has opened its local markets to competition.
"Once Qwest has divested itself of its customers, services and assets in the US West region consistent with its proposal in this proceeding, it may proceed with its merger with U S West," according to the order, which was completed in record time - under a year.
"It's been less than a year since we announced this merger, and we're poised to be able deliver its benefits to customers," said Solomon D. Trujillo, US West's chairman, president and CEO. "Completion of this merger will realize the vision we had to create a broadband communications powerhouse that offers customers greater choice and a wide range of advanced broadband, wireless and voice services."
Last week, the two companies received unanimous approval for their merger from the Arizona Corporation Commission (ACC) (www.cc.state.az.us), marking the completion of all required regulatory approvals in US West's 14-state region.
The FCC ruling also permits Touch America to receive temporary support services "to ensure that the transferred customers can be successfully incorporated into Touch America's business operations," the FCC said.
However, the FCC said, "while we find that the assignment to Touch America of certain contracts with Qwest's pre-existing customers, sales agents and distributors is permissible, we will not permit the renewal of certain discount and sales commission terms.
"Moreover," the FCC added, "the measures for transitional support services by Qwest to Touch America do not constitute the 'provision' by Qwest of prohibited in-region interLATA service."
The long-distance services and assets that will be sold to Touch America include switched long-distance that Qwest provides to customers in US West's region; toll-free services that terminate in US West's region; and calling card calls and prepaid card calls originating in US West's region.
The Qwest-US West merger is expected to close mid-summer.
