The Empire Strikes Back

US West is squeezing state legislators, but it's Colorado customers who may be gasping for breath.

"What I'm hopeful will come of this is that if US West is deregulated and they get their Federal Communications Commission approval to offer long distance, they'll be able to offer one-stop shopping for everything. If that occurs, then the other companies will have to expand into rural Colorado. They'd lose the long-distance service to US West if they didn't offer local service in Leadville."

But that's about as likely as somebody offering telephone service to the moon, say consumer advocates. Indeed, rural Coloradans are more likely than anyone else to be hurt by Chlouber's bill, says Chuck Malick of the Colorado Public Interest Research Group. "We already have a phone monopoly here with one of the absolute worst records for service. This bill takes away the PUC's authority over them. A lot of people will see quality of service get worse, especially in rural areas."

Today phone carriers that serve rural Colorado are required to offer many of the same services available in urban areas, but that requirement would disappear under the proposed bill.

Taking on the big boys: Chuck Malick believes that deregulating telecommunications will hurt consumers.
David Rehor
Taking on the big boys: Chuck Malick believes that deregulating telecommunications will hurt consumers.

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US West insists that the current situation is unfair since the telephone company must serve most of the state while its competitors can focus on highly lucrative business centers along the Front Range. "We see it [the bill] as the best way to bring competition to all consumers," says US West spokeswoman Anna Osborn. "As we're moving into a competitive marketplace, we need to get to a place where everyone is playing by the same set of rules. Right now US West is playing by one set of rules, and everyone else plays by no rules."

As it is now, Colorado law is designed to phase in competition in the telecom industry. Because US West has had monopoly power for so long, the PUC regulates some of its rates, even when there is competition, in an effort to prevent the company from targeting its upstart competitors and slashing its rates just long enough to drive them out of business. Several companies that offer high-speed Internet access fear this could happen under the new law.

"They could do whatever they want with the pricing of their retail service," says Eric Geis, vice president of Rhythms NetConnections, a local company that provides high-speed Internet access. "After they've wiped out everybody else, they can go back to their normal state and say, 'We're the only supplier in town, and you have to buy from us.'"

However, US West believes the PUC's efforts to protect small entrants into the telephone marketplace put Colorado's longtime monopoly phone carrier at a competitive disadvantage, taking away its most lucrative customers. "Since the Federal Telecommunications Act was passed in 1996, we've spent $1.5 billion to open up our network to competition," Osborn insists.

Geis says that in a normal industry, deregulation would free up competition and benefit consumers. But in most of Colorado, US West is still the monopoly provider, and most of its competitors have no choice but to tie in to US West's network. Rhythms has to contract with US West for several different services, and Geis says that without PUC oversight, his company could easily be harmed by its far larger competitor.

"In a natural market order, deregulation would work, but when the only player in town is a monopoly, you can't remove the rules that make sure they play fair," says Geis.

Chlouber is also sponsoring a bill that would destroy the state's Office of Consumer Counsel, a small agency that is charged with representing the interests of consumers in utility cases. The OCC has been highly critical of US West's service record and is frequently quoted in news reports. Under Chlouber's legislation, the agency would be replaced with a consumer advocate who would report to the PUC and would not be allowed to publicly challenge US West.

"What I'm trying to do is change a very expensive office that could better serve the people of Colorado," claims Chlouber.

Others say Chlouber is simply trying to get rid of the one state agency willing to go after a company as powerful as US West. "The OCC takes on the big boys," says Malick. "It's not an agency set up to make them happy. The last few years, they've taken on US West. They represent consumers, and people listen to them."

If state lawmakers do decide to grease the skids for US West, it may be because the telephone company has provided the political lube that gets things done. Last summer a Colorado judge ruled unconstitutional the campaign-contribution limits state voters approved three years ago, and US West has taken advantage of the situation.

Chlouber, who is the assistant majority leader in the state Senate, is a good example of US West's generosity. In the past few months he's collected $500 from the company's political action committee; $500 from the Colorado Telecommunications Association, which counts US West as its largest member; $250 from former US West chairman Dick McCormick; $250 from US West vice president for Colorado Kevin Smith; and $200 from US West lobbyist Steve Durham. Dozens of other legislators have also received large contributions from US West or its executives and lobbyists. (The phone company also gave $10,400 to Governor Bill Owens, including $10,000 to buy a table at a December party celebrating the anniversary of Owens's inauguration and $400 at a fundraiser/birthday bash for the governor last October. So far, Owens hasn't taken a position on the two bills.)

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