Commission Denies Qwest Business Services Deregulation Proposal

Theough their request is denied, Oregon will allow Qwest some pricing flexibility.

Qwest Headquarters

(SALEM) - Thursday the Oregon Public Utility Commission largely turned down a request by Qwest Communications Inc. to deregulate all telecommunications services it offers to businesses throughout Oregon.

Qwest claimed these services should be exempt from regulation because it is losing market share. However, an investigation by Commission staff found that Qwest still dominates the telecommunications market for business services outside of the Portland and Clackamas rate centers. In addition, market concentration measures suggest that the telecommunications market in Qwest’s service territory is not competitive.

“Most telling to me is the fact that Qwest has never reduced its prices to stem the loss of market share despite the fact that it can do so without prior approval of the PUC. With few exceptions, its business services are being offered at their maximum allowable prices,” Commission Chairman Lee Beyer said. “Is that competitive market behavior, I don’t think so.”

The order removes regulation for a handful of business services available from federal tariffs and, in the Portland and Clackamas rate centers, grants the company pricing flexibility for basic business service customers with four or more lines.

However, the Commission will continue to regulate services sold to small businesses in the Portland and Clackamas rate centers using fewer than four lines. And the Commission will also continue to impose price caps for popular business service options statewide.

In reaching its decision, the Commission examined Qwest’s market behavior as well as the markets themselves.

Qwest claimed all business services should be deregulated because it has competitors in every wire center and that it has allegedly lost market share.

The Commission concluded Qwest failed to meet its legal burden for customer, service and geographic markets out of the Portland/Clackamas area.

A major customer group, Telecommunications Association for Cost-Based and Equitable Rates (Tracer), opposed Qwest’s proposal. Tracer argued that prices would rise because there is insufficient competition.