Qwest settlement to benefit consumers, say Attorney General

SEATTLE—Attorney General Christine Gregoire last week announced a settlement with Qwest that will give the company’s Washington customers a one-time credit of about $30 on their phone bills.

The settlement, made in conjunction with Qwest’s plans to sell its lucrative Yellow Pages business, will also limit future rate increases.

In the agreement filed with the Washington Utilities and Transportation Commission (UTC), Qwest agreed to provide an immediate $67 million bill credit to its business and residential customers in Washington once the sale of its Yellow Pages closes.

The AARP, the Washington Electronic Business & Telecommunications Coalition (a group of Qwest's large business customers) and the federal Department of Defense joined the Attorney General’s Public Counsel Section in the settlement. The commission staff, which has formally recommended rejection of the sale, is not a party to the settlement.

The UTC, which must approve the settlement, is scheduled to conduct a formal hearing on Qwest's proposed sale this week.

The one-time bill credit reflects a portion of Washington's share of the proceeds from Qwest's proposed sale of its directory business, which includes the Dex Yellow Pages.

Qwest's parent company, Qwest Communications International, last summer agreed to sell the directory business for $7.05 billion. Before the sale can take place, the company must win approval from regulators in some of the 14 states where the company operates, including Washington.

Currently, Qwest's directory business earns at least $100 million a year for the company's local phone business in Washington, which helps keep local rates at current levels.

When proposing rate hikes over the next 15 years, the settlement also requires Qwest to factor in the estimated amount of revenue it would have received if it had retained its Yellow Pages operation. Under the settlement, that amount will be $110 million for the first four years, and $103.4 million for the following 11 years.

Company revenue is one factor used to determine if requested rate increases are justified. Adding the revenue credits to the company's tally sheet will limit rate hikes, state attorneys said.

"This settlement protects consumers from having to pay higher rates in years to come just because of Qwest's decision to sell one of its more profitable business enterprises," Gregoire said. "We are convinced this settlement is in the public interest."

The agreement further calls upon the company to continue customer service guarantee programs, such as the $50 missed appointment and commitment program, until at least 2005. Under the 2000 Qwest/US West merger agreement, the company agreed to provide customers with credits on their bills for missed installations, missed appointments and other service and repair problems.

In addition, the company agreed to improve access for its eligible low-income customers to the Washington Telephone Assistance Program, which provides discounted telephone service.

Office of the Attorney General release, May 16

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