DES MOINES, Iowa, June 13, 2002 ? Qwest Communications International Inc. (NYSE:Q) today filed an application with the Federal Communications Commission (FCC) for authority to provide long-distance service to more than a million customers in Iowa. In addition to Iowa, Qwest filed for authority to provide long-distance service in Colorado, Idaho, Nebraska and North Dakota. Over the summer and fall, Qwest plans to file similar applications for long-distance authority in the nine other Western states where it provides local communications. Qwest is the first company to file as many as five states with the FCC at one time and all states participated in the most thorough and comprehensive systems and performance test ever conducted.
Qwest filed with the FCC after the Iowa Utilities Board completed extensive hearings by finding that Qwest met all applicable requirements of the Telecommunications Act of 1996. The Utilities Board is scheduled to make a formal recommendation to the FCC supporting Qwest?s application in approximately 20 days. Qwest believes it has met all requirements of the act and expects to receive FCC approval 90 days after today?s filings.
?This is a great day for customers in Iowa and a real milestone for Qwest. Our local markets are fully and irreversibly open to competitors and now it?s time to open up the long-distance market to Qwest,? said Joseph P. Nacchio, Qwest chairman and CEO. ?The real winners will be Iowans, who will among the first in Qwest?s territory to benefit from real long-distance competition, including saving more than $57 million a year on their phone bills.?
In a final statement, commissioners said, "The Board is now prepared to indicate that the record establishes that Qwest has addressed the section 271 requirements," mandated by Congress for long-distance approval.
Qwest has spent more than $3 billion to open its markets to competitors and comply with the act. Today?s filing contains extensive evidence that Qwest met all the requirements of the act.
Qwest currently provides long-distance services outside the 14 Western states. However, when Qwest acquired U S WEST on June 30, 2000, Qwest had to divest itself of its long-distance business in those states. Under the act, Qwest can re-enter the long-distance business in a state once its application to the FCC has been approved.
The application includes data from an extensive third-party test of Qwest?s systems and performance that demonstrates Qwest?s excellence in providing wholesale services. The test covered 13 of the 14 states in Qwest?s local service territory and was conducted by regulators from throughout those states. During the test, tens of thousands of transactions were monitored to confirm Qwest?s ability to facilitate orders, installation, repair, billing and other services ordered by competitive local telephone companies. Qwest has also passed a separate and comparable systems test in Arizona.
Consumer Savings, Performance Assurance
Residential and business customers in Qwest?s region could save more than $1 billion annually with Qwest?s re-entry into the regional long-distance business, according to a study by Professor Jerry A. Hausman, director of the Massachusetts Institute of Technology Telecommunications Research Program. Qwest?s long-distance service offering will save customers in Iowa more than $57 million annually, or an average of $70 per residential customer, according to the study.
Qwest recently announced a simplified, basic long-distance pricing plan for residential customers. AT&T?s basic rate is nearly four times more expensive than Qwest?s. Qwest will offer this basic rate to customers, along with other long-distance pricing plans, once it receives approval from the FCC to sell long-distance service.
Regulators in Iowa also approved a comprehensive performance monitoring and enforcement plan to ensure the service standards for its wholesale customers remain strong. The plan provides individual competitors with damages if Qwest does not provide competitive local exchange carriers the same level of service that it provides its own retail operations or if Qwest fails to meet applicable benchmarks standards. Those damages could total as much as 44 percent of the net local service revenue Qwest derives from local exchange services in Iowa.
Local and Long-Distance Competition
Iowa?s local markets are fully and irreversibly open to competition, underscoring that Qwest has met FCC requirements for its application.
- Qwest?s estimates, based on an extensive analysis of competitor activity in Iowa, show that competitors have captured between 17 and 19 percent of the local phone market ? a greater percentage than they had in New York or Texas at the time local phone companies there received FCC approval to offer long-distance service;
- Competitors serve more than 208,000 customer lines in Iowa;
- The Iowa Utilities Board has approved 121 interconnection agreements between Qwest and competitors;
- Qwest has processed nearly 68,000 Iowa competitors? order requests in the past 12 months;
- 77 percent of Qwest?s Iowa customers have easy access to a competing facilities-based service provider;
- In April 2002 alone, more than 217 million minutes of traffic was passed between Qwest?s customers and competitors? customers over competitors? facilities in Iowa.
Customers have responded positively to increased competition in the long-distance market in the states where the FCC has approved long-distance applications. In the 12 months after Verizon received long-distance approval in New York, approximately 20 percent of customers switched to a Verizon long-distance plan. In Texas, more than 20 percent of local customers switched to an SBC long-distance calling plan in the first nine months the company was authorized to provide service.
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