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December 29, 2010 at 5:37 PM

Qwest takeover in state approved; rates flat, $80 mil for broadband

State regulators have reached a deal giving CenturyLink approval to take over Qwest operations in the state.

As part of its tentative agreement with the state Attorney General and Utilities and Transportation Commission, CenturyLink pledged to freeze basic phone rates for three years.

The Louisiana-based company will also invest a minimum of $80 million upgrading broadband infrastructure in the state over the next five years.

That includes a “significant” amount dedicated to improving broadband in underserved areas, the company said in a press release. This comes just after the state issued its broadband report raising concerns about limited broadband availability in rural areas.

CenturyLink announced in April that it planned to acquire Qwest in a $10.6 billion stock swap. Including Qwest’s debt, it was a $22 billion deal. The combined company will serve 17 million phone lines in 37 states.

The Washington agreement must be finalized by the UTC, which will hold hearings on the settlement Jan. 5-7. Elements of the agreement were first proposed by UTC staff in September.

Highlights of the settlement, as listed by the AG’s office:

– Basic residential telephone rates are frozen for at least three years for all customers, as are basic business rates for CenturyLink business customers.

– Qwest basic business rates, currently “price deregulated,” are limited to a $1 increase (up to a $30 per month maximum) for the next three years.

– Qwest and CenturyLink can’t collect any of the costs of the merger from their customers in rates, including any transaction, branding, integration, or increased management costs. These costs will be paid by shareholders. The companies have agreed not to request in the future a higher rate of return than would have applied without the merger.

– The merged company will continue to offer a “DSL only” plan.

– The merged company will continue to honor terms of service for plans purchased before the merger; for example, “price for life” contracts.

– CenturyLink agreed to mirror Qwest by adopting a $25 credit for a missed appointment and a $5 credit for service failures. (UTC staff had suggested raising this to $35) C- enturyLink and Qwest agree to extensive reporting requirements to allow the UTC to track the impact and implementation of the merger. They will provide information on financial conditions, service quality, broadband deployment, capital expenditures and integration of the companies.

– The companies commit to better promoting Lifeline, a program that offers reduced phone bills for low-income customers, and to improve how they handle complaints from Lifeline customers.

UPDATE: To comment to the UTC on the proposed settlement, you can attend a hearing at 5:30 p.m. Jan. 5 in the commission’s hearing room in the Richard Hemstad Building at 1300 South Evergreen Park Drive in Olympia.

Comments may also be mailed through Jan. 7 to UTC, P.O. Box 47250, Olympia, Wash., 98504, or via e-mail to comments@utc.wa.gov. Mailed comments should include your name and mailing address and mention “docket no. UT-100820.”

Comments | More in | Topics: broadband, centurytel, Public policy

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