Walking the walk

Qwest drops U S West appeals, vows to improve CLEC relations Seeking to grease the regulatory wheels for in-region long-distance approval, Qwest Communications last week introduced a suite of services for competitive carriers to encourage local competition and also dropped several appeals of state regulatory arbitration decisions.

The announcement comes a week after the company said it was moving away from an RBOC-style operation - often seen being uncooperative with competitors - into a more entrepreneurial business structure.

Though it dropped 17 appeals, about the same number remain up for review, a Qwest spokesman said. Still, this is a sharp contrast from the practices of U S West, whose regulatory strategy was interpreted by some competitive local exchange carriers (CLECs) as being designed to intentionally slow local competition.

"Having lawsuits pending that result in some decision two to three years from now is totally irrelevant. It's a waste of money," said Steve Davis, Qwest's senior vice president for policy and law.

The company believes offering for-charge services to CLECs will help it gain long-distance approval throughout its 14-state territory. Qwest was forced to divest its long-distance assets as part of its recent acquisition of incumbent carrier U S West and plans to file the first of its long-distance applications in the spring.

Embedded in Qwest's long-distance applications will be the Performance Assurance Plan, said the company spokesman. Under the plan, should Qwest receive long-distance approval in any state, it will monitor quality of service provided to CLECs.

If the service measurements do not meet the levels committed to in the Section 271 filing, Qwest could pay almost $600 million a year in fines to CLECs under interconnection agreements, Davis said.

With its margins slipping, the long-distance market has been the redheaded stepchild of communications lately. RBOCs have been slow in earning Section 271 approval, and investors have been down enough on the service that a recent rumor about AT&T divesting its consumer long-distance assets bumped up the carrier's share price. Analysts, however, still see it as a solid offering.

"The long-distance market is still a very attractive business, most especially if it's an incremental add-on to a customer relation-ship," as Qwest's offering could be, said Rob Norcross, vice president of Mercer Management Consulting.

Courtney Quinn, an analyst with The Yankee Group, agreed."The benefits that are to be gained by offering long-distance services outweigh the risk to opening up the network to competition," she said.

While analysts agree that the changes will help the company with its long-distance applications, implementing them may be difficult for Qwest.

"It's really a good step toward impressing regulators and opening markets and getting [long-distance] approval," Quinn said. "It's going to be a difficult road for them, though.... They are still dealing with an RBOC mentality in those who actually serve the CLECs. I think it's going to take a while for everyone to be comfortable with this kind of opening."

Norcross, while not doubting that Qwest Chairman and CEO Joseph Nacchio is dedicated to making the newly merged company a streamlined operation, agreed that it's the results that matter.

"The announcements are all well and good, but we have to see how they play out," he said. "Any company can announce anything. It's how they follow through that counts."

At least one early indication, though, suggests the changes actually are having an effect.

"I definitely feel it's a good first step for Qwest in moving toward a more open and facilitating environment for competition," said Robert McCausland, vice president of regulatory and interconnection at Allegiance Telecom. "We've already seen efforts in the last couple of days to improve relations with us."

Still, McCausland is far from completely satisfied with Qwest's service standard.

"Qwest has a long way to go to improve performance in several key areas, including co-location, order processing and timely delivery of services."

Another question is how these changes will affect the other independent LECs. With bundled services expected to play a major role in customer decision making in the future, Quinn believes there will be watered-down versions of Qwest's adjustments at other incumbents.

"These changes are going to come," she said. "Maybe not at the level Qwest is implementing them, but they're going to have to come, and companies are realizing that."

- Co-location space reservation: Qwest will let CLECs reserve co-location space up to a year in advance

- Co-location in 90 days: CLECs will be given co-location space in a CO within 90 days of their request, provided sufficient space is available

- Single point of interconnection per LATA: U S West required CLECs to interconnect their facilities in each local calling area. Interconnecting through one point per LATA can provide CLECs with greater network efficiency

- CLEC-to-CLEC connections: CLECs can directly connect with each other within a CO for the mutual exchange of local traffic, instead of being required to make these connections in separate facilities