Qwest deal raises specter of change
Critics fear companies' guarantees don't go far enough to protect interests.
By Steve Alexander
October 17, 2010
Decades ago, when Northwestern Bell was the telephone
Now one of the last of Ma Bell's offspring, the Baby Bell Qwest, is seeking to be acquired by Louisiana-based telephone company CenturyLink for $10.6 billion in stock. But Qwest's competitors and union employees are worried about what Qwest will look like in the future.
As a result, they've said they'll oppose the deal in state
regulatory hearings unless they get guarantees that they won't
be hurt by planned cost-cutting in the Qwest operations over the
next five years. Qwest and CenturyLink are trying to head off
that threat by presenting their own vision of what
The two phone companies issued a list of guarantees about
what they would and wouldn't change in Qwest's
In addition, the two phone companies guaranteed a minimum
investment in high-speed Internet service in
The guarantees, which were negotiated privately between Qwest, CenturyLink and the Minnesota Department of Commerce, appear to be designed to mollify opponents of the acquisition.
"It is substantially less than they spent on broadband in
The union is also worried about the apparently lowered level of broadband spending, because it considers high-speed Internet service a major way that Qwest can retain customers and thus keep union workers employed.
"If that $50 million were in addition to what Qwest has
been spending on broadband, that would be a different story. But
it's not," said Scott Rubin, a
John Stanoch, Qwest's
Nicole Garrison-Sprenger, a Commerce Department spokeswoman, said that because the state doesn't regulate broadband, any commitment is a gain.
What's unclear about the Qwest-CenturyLink guarantees is whether they represent a final offer to acquisition opponents, or just a starting point for negotiations. There are hints of both.
For example, the Qwest-CenturyLink guarantees are being offered to the Minnesota Public Utilities Commission as a take-it-or-leave-it package. If the commission alters the guarantees, Qwest and CenturyLink reserve the right to walk away from their promises.
At the same time, Qwest and CenturyLink executives don't rule out making further compromises with acquisition opponents. In an interview, they said they'd continue to have discussions with the local exchange carriers and the union.
"Qwest's performance will not erode," Stanoch said. "But if the CLECs have additional concerns, we will continue to discuss matters with them."
Steve Alexander • 612-673-4553