Qwest urges FCC to impose restrictions on merging firms

Deseret News (Salt Lake City), Oct 13, 2005 by Sandy Shore Associated Press

DENVER -- Qwest Communications officials pressed their case Wednesday for the government to impose restrictions on two telecommunications mergers, reiterating their contention the pending deals could hurt competition and raise prices.

As proposed, the unions of SBC Communications Inc. and AT&T and Verizon Communications Inc. and MCI Inc. would dwarf competitors and control much of the domestic market, Qwest Senior Vice President Steve Davis told reporters at a Washington briefing.

Qwest, the Denver-based local phone service provider in 14 mostly Western states, including Utah, has urged the Justice Department and the Federal Communications Commission to set several conditions for merger approval, including a requirement that the companies sell overlapping assets and maintain competitive prices.

"The government must preserve existing competition," Davis said.

Verizon and SBC representatives denied Qwest's claims and said they believed the mergers would create companies that will compete globally.

"People can see through Qwest's scheme of trying to acquire potential divested assets and customers at bargain-basement prices," SBC spokesman Joe Izbrand said in an e-mailed statement.

"Following its failed bid for MCI, Qwest's corporate strategy of 'merger by regulatory liquidation' is one that doesn't carry much public-interest weight with policy makers," he wrote.

Verizon spokesman Eric Brand said Qwest is interested in any MCI facilities that may be sold, but Verizon officials do not believe divestiture is justified.

"We think there are very few places in which there is an overlap," he said. "We'll see what we get asked to do."

The Justice Department and FCC must approve San Antonio, Texas- based SBC's $16 billion acquisition of AT&T and New York-based Verizon Communications Inc.'s $8.5 billion offer for MCI Inc.

Qwest Communications International Inc. this year lost a high- stakes bidding war with Verizon for MCI, based in Ashburn, Va. Qwest then said it would explore options ranging from acquisitions of smaller companies or assets to partnerships.

It has repeatedly said the mergers would hamper competition and did so again Wednesday.

"If SBC and Verizon are allowed to give each other preferential rates and service for essential services, no other firm will be able to compete with them anywhere," Davis said.