Qwest’s battle to disrupt two huge mergers in the U.S. telecommunications industry is moving from rhetoric to allegations of anti-competitive behavior.
In a nine-page filing to be made today with the Federal Communications Commission, Qwest accuses telecom giant SBC of making an industry blacklist and blocking competitors through onerous pricing rules.
The filing comes as the FCC, the U.S. Department of Justice and regulators in various states consider two mega-mergers: SBC-AT&T and Verizon-MCI. On Tuesday, reports surfaced that the FCC could approve both mergers as early as Oct. 12.
“This is an eleventh-hour act of desperation on (Qwest’s) part,” SBC spokesman Joe Izbrand said. “This filing is a sad, desperate act by one of our competitors who is afraid of having a vigorous competitor in their own backyard.”
Two experts doubt that the allegations, though serious, will affect the SBC-AT&T merger.
“None of the allegations are merger-specific,” said Phil Weiser, associate professor of law and telecommunications at the University of Colorado. “They have to do with the character of SBC.”
Qwest’s filing accuses SBC of threatening to terminate sizable contracts with WilTel and Doug las County-based Time Warner Telecom if either telecom provider decides to merge with an “SBC Restricted Company.”
After Qwest lost its takeover bid for MCI in May, analysts said the Denver-based phone provider could try to buy Time Warner Telecom.
Steve Davis, Qwest’s senior vice president of public policy, said Qwest is not certain it is on what he calls SBC’s “blacklist.” He was to meet today with the FCC to discuss the matter.
“These guys couldn’t even wait until the merger was over to start flexing their new muscles,” said Davis. “They are trying to make sure that competitors remain small.”
Time Warner Telecom and WilTel declined to comment.
Qwest’s other allegations against SBC have to do with complex manipulations of wholesale contracts that could prevent Qwest and other telecom companies from gaining market share within SBC’s 13-state territory.
One analyst was skeptical of Qwest’s claims.
“Qwest is stepping up the rhetorical battle,” said Janco Partners analyst Donna Jaegers. “It’s hard to believe there would be a blacklist.”
Qwest has been calling for months for MCI and AT&T to divest all of their network assets in the regions of their larger takeover partners. SBC operates across 13 states, including California and Texas, while Verizon operates in 29 mostly Northeastern and Midwestern states.
After losing the battle for MCI in May, Qwest chief executive Richard Notebaert offered a “Plan B” that called for purchase of the assets shed by Verizon-MCI and SBC-AT&T. What Qwest wants most, analysts say, are the local fiber-optic lines controlled by MCI and AT&T. These lines provide access to office buildings in SBC cities such as Dallas, Chicago and San Francisco and Verizon cities such as New York, Boston and Washington, D.C.
“Those facilities compete directly with SBC,” Davis said. “If SBC can mothball those facilities, it gets rid of a major competitive constraint.”
Staff writer Ross Wehner can be reached at 303-820-1503 or rwehner@denverpost.com.
