Minnesota utility regulators ruled Monday that Qwest Communications violated state and federal law by making secret agreements favoring some local telephone competitors over others.
The decision by the Minnesota Public Utilities Commission upheld recent findings by an administrative law judge. Minnesota regulators will decide in a separate proceeding next month how much Qwest should be fined. The Minnesota Department of Commerce had proposed fines of at least $50 million.
AT&T contended that Qwest made the deals to buy the silence of McLeod USA and Eschelon Telecom during Qwest’s bid to re-enter the long-distance market.
The Colorado Public Utilities Commission opened a formal investigation on the unfiled wholesale agreements last week, but is treating the case separately and has supported Qwest’s long-distance re-entry.
John Stanoch, Qwest president of policy and law for Minnesota, said in a statement Monday that Qwest was disappointed in the Minnesota commission’s decision.
But in the closest acknowledgment yet that Qwest may have done something wrong in failing to file the agreements, Stanoch said Qwest understood the Minnesota commission’s concerns and will follow its direction.
“Qwest has made personnel changes and has adopted formal internal controls that ensure that all necessary agreements are filed with the commission for review and approval,” Stanoch said. “In fact, we have been following this standard since last spring, which puts us in compliance with FCC (Federal Communications Commission) guidance.”
Stanoch said any effort to revoke Qwest’s certificate of authority in Minnesota or separate the company’s retail and wholesale divisions would be “extraordinary and unwarranted” and would only hurt “customers, competitors, employees and retirees.”
During Monday’s hearing, Minnesota PUC Chairman Gregory Scott indicated he was so disgusted by Qwest’s behavior that it might be best to replace Qwest.
Tom Pelto, AT&T’s vice president of law and government affairs, on Monday applauded the Minnesota regulators’ decision “for standing up to Qwest and finding the company guilty of gross violations of state and federal law. With this ruling, the PUC has affirmed its commitment to Minnesota consumers and honest, forthright phone competition.”
Pelto added that Minnesota regulators “saw through Qwest’s veiled attempts to hide the obvious – that Qwest blatantly ignored the law, bought the silence of competitors to gain long-distance approval and gave substantial advantages to some competitors to the harm of others.”
Ken Reif, director of the Colorado Office of Consumer Counsel, the state’s utility watchdog, said Monday it’s still too early to know whether the secret agreements affected the long-distance re-entry process in Colorado.