Accused of Deals-For-Access Scheme
By Kevin O'Hanlon, AP
Tuesday, October 3, 2006
LINCOLN, Neb. (AP) - Qwest Communications is being accused of
making secret deals that prevented some phone companies from
having fair access to lease its phone lines in Nebraska.
In a lawsuit filed in U.S. District Court for Nebraska,
AT&T Communications of the Midwest Inc., and TCG Omaha,
Inc. accuse Qwest of hampering competition required under
The 1996 Federal Telecommunications Act sought to break apart
the local phone monopoly held by regional carriers such as
BellSouth Corp., and
Verizon Communications by making their networks available
to rivals at discounted rates to foster competition.
To do that, Qwest and the other regional carriers are supposed
to reach agreements with local phone companies to handle
telephone calls to their customers.
Once such agreements are reached, the so-called incumbent
carriers are required to notify the state Public Service
Commission and offer similar rates to other carriers, according
to the lawsuit.
"Notwithstanding these legal requirements and prohibitions,
Qwest entered into secret interconnection agreements with two
telecommunications providers in Nebraska," according to the
lawsuit, which was filed by attorneys Loel Brooks and Dennis
Friedman. "The secret agreements permitted those providers to
purchase certain products and services at discounts of up to 10
percent off the rates that other carriers, including AT&T and
TCG, were paying Qwest for the same services."
The lawsuit identified the carriers that got the so-called
secret rates, starting in 2000, as Eschelon and McLeodUSA
Telecommunications Services, Inc.
AT&T and TCG suffered damages in excess of $900,000, according
to the lawsuit.
"Qwest intentionally failed to apprise AT&T and TCG of the
existence of the secret agreements in order to induce AT&T and
TCG to continue to pay the higher rates in their interconnection
agreements rather than to avail themselves of the discounts in
the secret agreements," according to the lawsuit.
Qwest spokeswoman Kara Rovere said she would not comment on
In 2002, the Nebraska PSC finalized the terms under which Qwest
would lease its line to competitors, ending a long-running
battle over the rates Qwest could charge.
Qwest is the state's largest provider of local telephone
service, supplying 274,000 of the state's 1 million local phone
There are 145 carriers who have received approval to provide
competitive local exchange phone service in Nebraska. However,
not all carriers are currently offering local service.
The former Bell companies argued earlier that federal regulators
were cheating them out of their sizable investment by limiting
what they can charge companies for using their phone lines.
Shares of Qwest edged down 2 cents in aftermarket electronic
trading, from their New York Stock Exchange close at $8.52. AT&T
shares closed at $32.23 on the NYSE.