The Federal Communications Commission has granted Qwest Communications International Inc. authority to provide long-distance services in three states within its 14-state local territory: New Mexico, Oregon and South Dakota.
Qwest is authorized to provide long-distance services in all but two states within its local phone region: Arizona and Minnesota.
The FCC will make a decision by June 26 on whether to grant Qwest authority to provide long-distance service in Minnesota. Qwest said it plans to file an application with the FCC for long-distance authority in Arizona within the next few months.
The Telecommunications Act of 1996 requires the regional Bell operating companies to open their networks to competitors and meet a 14-point checklist to receive authorization to provide long-distance services within their local territories. Denver-based Qwest says it has shelled out more than $3 billion to open its local markets to rivals and comply with the law.
Similar to yesterday’s decision granting SBC Communications Inc. long-distance authority in Nevada, FCC commissioners expressed concern over the level of competition in the residential local phone market in New Mexico.
The FCC granted Qwest long-distance authority based, in part, on documents Qwest provided that show customers of wireless provider Cricket are using broadband PCS service as a replacement – not as a supplement – to their landline phone at home.
Leap Wireless International Inc., Cricket’s parent company, yesterday filed for bankruptcy court protection.
“Given that this provider has just filed for Chapter 11 bankruptcy protection, I have some concerns with the long-term health of competition in New Mexico,” says FCC Commissioner Kevin J. Martin. “At this point, however, no evidence exists indicating that the PCS provider has stopped offering or providing service in the state.”
Under a requirement of the 1996 Telecom Act, a Bell operating company cannot offer long-distance services until at least one competitor is providing local phone service to more than a “de minimis” number of business and residential customers.
In a 1998 order, the FCC determined that broadband PCS service could meet the criteria in the residential market if a Bell company could show that PCS is replacing the landline phone at home. The FCC said a Bell operator "must show that broadband PCS is being used to replace wireline service, not as a supplement to wireline," and that the value of any study demonstrating such activity "will depend in large part on the quality of the study and statistical methodologies that are used."
Qwest presented the New Mexico Public Regulation Commission a Cricket telephone survey to show that consumers were replacing their wireline phones with Cricket. But the state commission found "significant problems inherent in the design, methodology and implementation of the Cricket survey."
The state regulator also says, "there is no single exhibit, strand of testimony or other piece of evidence that proves with any degree of reasonable certainty" that Qwest "has met its burden of showing there is an actual and significant amount of Cricket subscribers in Qwest's New Mexico territory who have substituted broadband PCS service for Qwest wireline service."
