• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

ACC Approves Qwest Rate Plan: Company Will Have More Flexibility on Setting Prices

Posted on: Friday, 17 March 2006, 15:00 CST

By Ed Taylor, The Tribune, Mesa, Ariz.

Mar. 17--The Arizona Corporation Commission unanimously approved a new rate plan for Qwest Communications International on Thursday that will give the company more flexibility to raise or reduce prices to match its competitors in the telecom industry.

The plan technically allows the company to increase rates on some services by up to $31.8 million in Arizona annually. But Qwest spokesman Jeff Mirasola said the company isn't likely to raise rates that much because it has to match prices charged by competitors.

Qwest, which offers traditional land-line telephone services, is facing increased competition from cable television, wireless and Voice over Internet Protocol technologies that are eroding its customer base.

"That is the reality of what we are facing," Mirasola said, adding that "any increase will be determined by the market."

Under the plan approved by the commission, Qwest products and services would be divided into three baskets for price-setting purposes. Services in the first basket, including basic land line phone services for residents and businesses, will not increase over the three-year life of the agreement.

In the second basket, which includes caller ID, number forwarding and custom calling services, the company could increase rates a maximum of 25 percent over 12 months. In the third basket, where Qwest faces stiff competition such as 800 service, home business lines and local service packages, Qwest would have even greater flexibility to adjust prices up or down to match competitors.

"This is a big win for ratepayers of Qwest telephone service," said commission chairman Jeff Hatch-Miller. "It locks in the rate for basic service for another three years while allowing Qwest to be a full player in the market. They were pretty well shackled."

Mirasola said the company will used the flexibility to offer more bundled packages of services that it could offer at reduced rates to attract more customers. Also he said the new rate structure will allow the company to offer promotions without tipping off competitors in advance.

"Now when we want to do a promotion we have to file it with the commission and wait 30 days," he said. "Competitors can see it, and they might undercut us with a better promotion. Now . . . we won't have to telegraph our promotions."

In exchange for greater pricing flexibility Qwest agreed to a 75-cent monthly reduction in the charge for nonlisted and nonpublished telephone numbers.

The settlement was opposed by the Residential Utility Consumer Office, which represents consumer interests in cases before the commission. RUCO attorney Daniel Pozefsky said the plan doesn't do enough to encourage telephone competition, particularly in rural areas, nor does it force Qwest to compete in the free marketplace.

Specifically, he said the rate plan treats all parts of the state the same even though Qwest faces different levels of competition in different parts of Arizona.

-----

Copyright (c) 2006, The Tribune, Mesa, Ariz.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

NYSE:Q,

Source: The Tribune

More News in this Category