Qwest, MCI Reach Access-Fee Deal

The first big break in the ongoing battle between local telephone monopolies and long-distance providers over access-fee charges came after marathon negotiations resulted in long-distance provider MCI and local telephone service provider Qwest reaching a commercial agreement on the charges.

However, gridlock on the issue remains in effect across the remainder of the industry as the other former RBOCs (Regional Bell Operating Companies)--BellSouth, SBC Communications, and Verizon Communications--did not reach agreement with independent telecommunications providers. The largest of the independent long distance providers, AT&T, was conspicuous by its absence from the Qwest agreement. AT&T has already said it will challenge the court ruling behind most of the intense negotiations.

In a joint statement, Qwest and MCI said rates for Qwest's Platform Plus (QPP) will increase an average of less than $5 for business and residential subscribers by the end of a transition period through January 2007.

Consumer groups have protested that the decision by the U.S. District Court of Appeals for the District of Columbia on access fees will likely result in higher telephone rates for consumers. The court threw out old rules on access fees with the result that the RBOCs can raise the fees they charge long distance providers to access their local networks. The issue is considered to be politically sensitive because of the possibility that phone rates will rise in an election year; the Reuters news agency reported that President Bush reviewed the issue with FCC Chairman Michael Powell last week. Powell promoted the talks between the RBOCs and the independents suppliers.

In a statement, Qwest and MCI said: "The MCI-Qwest agreement--reached after five weeks of mediated negotiations between the carriers--comes less than 90 days after the D.C. Circuit Court issued a decision vacating FCC wholesale pricing rules. Today's agreement provides for both wholesale pricing continuity for MCI and a guarantee that such services will continue to be available."Qwest was the only RBOC that agreed to mediate on the issue when negotiations began in April. The contract was mediated by Cheryl Parrino, former chairman of the Wisconsin Public Service Commission. Qwest's CEO and chairman Richard Notebaert thanked Powell for his "continued support and encouragement," but added that the agreement was "forged without any regulatory assistance."

Powell has been urging the RBOCs and the independents to attempt to work out deals among themselves before a June 15 deadline, when the Appeals Court decision may be appealed.

SBC has proposed a charge of $22 a line, but that has been rejected as too high by the independents. AT&T has complained that it is "troubled by the fact the Bells continue to negotiate from the position that consumers will have to pay more for local phone service."

In a statement on the issue Tuesday, BellSouth urged the FCC to establish a framework for the industry to follow after the demise of the old access-fee rules. A BellSouth spokesman said: "Good faith negotiations resulting in commercial agreements are the best remedy to this situation. We will continue to talk with our wholesale customers who want to talk with us in hope of reaching individually negotiated agreements."