loses its case on right of way
By Ken Alltucker
The Arizona Republic
Friday January 20, 2006
A federal Appeals Court has
rejected Qwest Communications' attempt to avoid paying
millions of dollars in fees for the right to use its lines
and cables across Arizona cities and towns.
The 9th U.S. Circuit Court of Appeals rejected the telephone
company's argument that right-of-way fees assessed by Tucson
and three other Arizona municipalities were unlawful and
should be eliminated. The court decision is the company's
latest defeat in a years-long effort to avoid paying the
Qwest officials described the court's decision, filed last
Friday, as a setback for consumers because the fees are
passed directly to the company's customers in Tucson, Globe,
Miami and Nogales.
Qwest has paid more than $20 million in fees to these cities
since 2001. No other town or city in Arizona that Qwest
services pays these fees, company spokesman Jeff Mirasola
"This ruling turns out to be a defeat for consumers,"
Mirasola said. "There are millions of dollars in question.
We don't believe the fee should be levied. We are
considering what further action to take to best protect our
No two ordinances are identical, but the fees range from 2
percent to 5 percent of the company's gross revenue derived
from services offered to residents and businesses. Tucson,
for instance, assesses a 2 percent charge on all
telecommunications providers and an additional 1.5 percent
for right-of-way users such as Qwest. Since 2001, Tucson
has collected about $7.5 million but held off spending the
money until the court case ended.
"This removes any reservation we would have over spending
that money," said Mike Rankin, Tucson's city attorney.
Qwest has battled the issue for nearly a decade.
The telephone company's lobbyists persuaded lawmakers to
pass a law in 1997 that made it more difficult for cities to
collect the fees.
After the legislation was adopted, many cities dropped the
fee. Tucson and the other affected cities modified their
ordinances to be in line with the legislation. Surprise
also had an ordinance but later dropped it, Mirasola said.
Qwest then took its fight to U.S. District Court, but it
lost that battle, too, after the court ruled the charges
amounted to a tax that the cities were allowed to levy.
Qwest appealed to the 9th U.S. Circuit Court of Appeals in
Qwest isn't the only company unsuccessful in attempts to rid
itself of such municipal fees.
Cable representatives supported a bill in the Arizona
Legislature last year that would have eliminated millions of
dollars in right-of-way fees paid by companies to cities and
Cable interests argued the industry and its customers are
being singled out because they must pay cities for
right-of-way access. Cable groups add that satellite and
wireless providers aren't stuck with a comparable tax or
fee, so it effectively gives those services a competitive
advantage. The legislation was defeated.