Touch America Claims Qwest Violating Telecom Act

Touch America (www.tamerica.com), a national fiber-optic network and high-speed broadband products and services subsidiary of the Montana Power Co., filed a complaint with the Federal Communications Commission (FCC, www.fcc.gov), asking the federal agency to stop Qwest Communications International Inc. (www.qwest.com) from selling long-distance services in its 14-state region in violation of the Telecommunications Act of 1996.

Qwest, meanwhile, maintains that it divested all requisite interLATA services as of June 30, 2000, and is not offering or marketing intraLATA long-distance inside of its 14 states.

Under Section 271 of the Telecom Act, a local phone company such as Qwest is barred from selling long-distance voice or data telecommunications services across its monopoly region (in-region) until it has satisfactorily opened its local market to competition and has received approval from the FCC.

“Qwest is marketing and selling voice and data long-distance services under ‘Capacity IRU’ agreements,” said Cort Freeman, Touch America’s vice president of corporate communication. “When you strip away the rhetoric, we think capacity agreements in the form of Lit Capacity IRUs are just plain old private line, long-distance leased circuits.”

Private line circuits are customarily used by large commercial customers and telecommunications carriers between major cities such as Seattle to Denver or Denver to Los Angeles. “The whole Lit Capacity IRU concept is admittedly clever,” Freeman said. “But the bottom line is that Qwest is selling private line or dedicated long-distance services when it lacks FCC approval to do so.”

According to Qwest, however, an IRU is a facility, not a service, and therefore sale of an IRU is not subject to Section 271 at all. The FCC was fully aware of Qwest's IRU sales when it approved Qwest's acquisition of US WEST, and agreed that continuing IRU sales do not raise legal issues, Qwest spokesman Steve Hammack says.

“Touch America is simply trying to make this situation complicated when it is really quite simple,” Hammack says. “They are not paying their bills. And they can't hide that fact behind a smokescreen of unfounded and inflammatory allegations.”

Qwest claims these allegations are wrong and that Touch America has brought them up about once a month in a different venue since last August, when Qwest first filed a lawsuit against Touch America to get the company to pay its bills to Qwest, Hammack says.

Qwest maintains that a “Lit Capacity IRU,” marketed as its ‘wavelength’ service, Q Wave, is a network facility. Touch America contends otherwise.

“Under the terms of a Qwest Capacity IRU agreement, Qwest doesn’t sell any network facilities,” Freeman said. “Qwest keeps title to all the network infrastructure and operates and maintains it, something that wouldn’t happen if the capacity sale represented a network facility. Capacity is a service that exists because of the facilities; it isn’t a facility. Any way you look at it, with the retention of ownership, this really is providing services, not selling facilities.”

According to Freeman, the ultimate user also has no say in the operation of the Lit Capacity IRU except to pick up the phone and make telephone calls or, on the wholesale side, route customer traffic.

“Further, we have researched the FCC record regarding Qwest’s merger, divestiture, and acquisition activities and have not found anything to support Qwest’s assertions that the FCC knowingly approved Qwest provisioning Lit Capacity IRU’s in its service territory,” he said.

“One thing is certain: If the FCC rules in our favor, Touch America expects to be compensated for the lost revenues it has suffered because of Qwest activities during this time,” Freeman said.

The complaint filed with the FCC lists seven customers and 14 circuits as examples of Qwest providing Capacity IRUs in-region.

Touch America has other complaints with Qwest and will file them with the FCC soon, Freeman said.

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