Qwest's Low Investment Hurts Consumers
David Mittle, 12.30.04, 12:39 PM ET

Albuquerque Journal

GUEST COMMENTARY: A great inequity is being perpetuated on consumers by Qwest (Communications), yet our lawmakers remain noticeably apparently oblivious. By March 2006, Qwest will owe consumers more than $200 million in telecommunications infrastructure improvements.

With its current level of minimal investment, the negative impacts of Qwest's lack of investment will be far reaching: Consumers will face the loss of service quality and slower introduction of new services; businesses will become reluctant to invest in New Mexico knowing telecommunications services will not be adequate to meet their needs.

Our children will not have access to advanced learning technology; telemedicine will not be available in the rural parts of the state. How the Legislature could for even a nanosecond consider rewarding Qwest with less regulation says more about the state of politics in New Mexico than prudent telecommun-ications policy.

Re the Outlook article "Qwest Wants More Pricing Flexibility in N.M." of Dec. 20 and "Qwest Asking for Nothing That's New," Outlook guest commentary by Loretta Armenta, president of Qwest New Mexico, on Dec. 23:

US West's legacy was one of under-investment and over-earnings. Nonetheless, in 2000, at about the same time the attorney general was asserting US West was over-earning nearly $100 million per year, legislation was enacted that changed how US West would be regulated.

Skipping some of the details, in March 2001, the state Public Regulation Commission approved a five-year regulatory plan for Qwest (which had by then purchased US West). Qwest would generally be free to execute its business plan and earn as much profit as it could through its own ingenuity and diligence as long as it achieved and maintained certain standards of service and invested not less than $788 million by March 2006. In addition, Qwest would be allowed to, and did, raise its rates for basic residential services, contrary to Armenta's essay, over 26 percent in the first 2 years of the plan.

As for investment, Qwest did make a substantial investment in 2000 and 2001. However, in 2002, Qwest effectively stopped investing. Qwest is currently investing at the rate of about $65 million per year close to half of what US West was averaging over its last five years. What may be more telling is that Qwest may actually end up investing less during its five years than US West did in its last five years.

Alleged competition is no reason to excuse Qwest from investing or to limit the PRC's regulatory oversight. Competition is, for the most part, nonexistent in New Mexico and almost assuredly will be less in the future. The number of (telephone) lines Armenta says Qwest has lost is exaggerated and speculative, but, nonetheless, because of recent orders from the Federal Communications Commission, most of the "lost" lines will soon be Qwest's again.

If the investment is not made today, repercussions will be felt tomorrow. Since networks cannot be built overnight, investment must be made today to ensure that the system will be robust in the future. Otherwise, quality of service will deteriorate and we will again have a phone company that cannot meet the demands of New Mexicans.

On Jan. 4, the PRC will reconvene a hearing on whether remedial measures should be imposed on Qwest to ensure that it comes into and remains in compliance with its investment requirements. The PRC must order Qwest to once again begin meaningfully investing today, or the lack of a telecommunications infrastructure, the mainstay of economic development in all parts of our state, will again plague New Mexico for years to come. It wouldn't hurt if our lawmakers would start paying attention.

From the Executive's Desk

NAME: David Mittle

TITLE: Founder, counsel

COMPANY: Citizens for Integrity and Transparency in Utility Matters, a Santa Fe based grassroots organization that follows state utility matters. (www.citum-nm. blogspot.com)

The Journal welcomes essays on issues from New Mexico business owners and managers. Length should be kept to about 600 words. Please contact business editor Mike Murphy at (505) 823-3830, e-mail at mmurphy@abqjournal.com, or fax at (505) 823-3994.

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