The Arizona Corporation Commission has recommended Qwest Communications International Inc. pay a $15 million fine and grant its rivals three years worth of discounts for entering interconnection agreements that were not filed with the regulator.
The staff of the commission claims Denver-based Qwest offered certain rivals favorable wholesale discounts in return for them not participating in a regulatory process integral in determining whether the phone giant has opened its network to competitors and should be allowed to provide long-distance services.
Arizona and Minnesota regulators have named McLeodUSA Inc. and Eschelon Telecom Inc. as the phone companies who received special discounts.
ACC staff also is recommending Qwest implement a code of conduct to govern relationships with competitors and appoint an independent monitor to ensure the company is complying with the interconnection provisions of the Telecommunications Act of 1996, says ACC spokeswoman Heather Murphy.
Qwest maintains it had no malicious intent and did not file the documents because it did not think it had to. “Our belief was these weren’t interconnection agreements, that they were dispute resolutions agreements, etc. So we therefore felt they didn’t need to be filed,” Qwest spokesman Bill Myers says.
Staffers of the Arizona commission and other witnesses have been testifying all week before Jane Rodda, an administrative law judge. The hearing was expected to end today, but Qwest spokesman Jeff Mirasola says he does not expect the judge to issue a recommendation to the commissioners for seven or eight weeks.
The proposed fines are “excessive,” Mirasola says, because the future discounts granted to rivals would exceed the alleged discounts Qwest granted to McLeodUSA and Eschelon Telecom. The ACC is proposing 18 months of retroactive discounts be granted to rivals, and another 18 months of discounts on future wholesale purchases.
An investigation by Minnesota regulators prompted the ACC to launch its own probe last year, Murphy says.
In November Minnesota regulators found Qwest “acted in an anticompetitive and discriminatory manner.” Three months later the Minnesota Public Utilities Commission adopted a motion recommending Qwest pay a $26 million fine, or grant rivals – other than McLeodUSA and Eschelon Telecom - four years worth of discounts. Qwest maintains the decision is flawed and has filed for reconsideration.
Other regulators within Qwest’s 14-state region have looked into the matter. The Iowa Utilities Board found no penalties were warranted, Myers says, and Colorado and New Mexico regulators are in the early stages of probes.
A spokeswoman for the New Mexico Public Regulation Commission could not be immediately reached for comment Friday.
The Colorado Public Utilities Commission launched an official investigation into Qwest in October 2002, a PUC spokesman says. The regulator is in the midst of a public comment period that stretches through April 8 and reply comments are due the following month. No hearing has been scheduled.
