The Empire Strikes Back

Last year more than 40,000 Coloradans faced delays in getting new telephone service, and frustration with US West became front-page news all over the state. Adding fuel to the fire were revelations that US West routinely lied about installation dates -- a policy dubbed "customer not educated" -- and ranked every neighborhood in Colorado as "gold, silver, or bronze" based on income, instructing employees to give priority to the "gold" districts.

Last month the state Public Utilities Commission ordered the phone company to refund $12.8 million to customers to compensate for poor service, a penalty many believe is too small given the abysmal service record.

But the public's anger seems to have gone unnoticed at the Colorado Legislature, where a bill being considered would gut the state's authority to regulate US West and leave Coloradans at the mercy of the monopoly phone carrier. A companion bill would also effectively silence the state's lone advocate for consumers.

Both bills have a good chance of passing, thanks to a massive lobbying campaign. A blizzard of campaign contributions to Colorado legislators from US West won't hurt the cause, either.

The bill to deregulate US West is being sponsored by Senator Ken Chlouber, a Leadville Republican. His bill would deregulate almost all telephone services in Colorado on July 1, 2003, allowing US West to set its own rates, even if there is no competition in place. The only thing still regulated would be the first line for local service into a home or business, but everything else -- including additional lines, in-state long distance, directory assistance, call waiting, call forwarding and high-speed Internet access -- would be free of all regulation. The legislation would also likely make it impossible for the PUC to fine US West as it did last year.

Since a majority of Coloradans are not expected to have an alternative to US West three years from now (since US West owns the only infrastructure currently in place), the bill would let the phone company have its way with Colorado consumers. As written, the legislation could even drive some of the companies now trying to compete with US West out of Colorado.

"This is the most devastating piece of legislation we've faced in all 21 states we operate in," says Bill Courter, vice president for public policy at McLeod USA. "Consumers should be outraged about this."

McLeod leases space on US West's Centrex system and resells it to residential and business customers. Under the bill, US West would no longer be required to lease out any of its Centrex equipment, allowing the company to force McLeod out of the Colorado market, since it would have no other infrastructure on which to sell service.

Courter says he's flabbergasted that the bill is being seriously considered. The legislation cleared the Senate's Business Affairs and Labor committee by a 7-2 vote last week and now goes to the full Senate. "Every day for the past few months, there have been complaints filed by consumers about US West's poor service," he says. "What will it be like if there's nobody with the ability to monitor their customer service?"

Several other US West competitors, including MCI Worldcom, AT&T, Next Link and ICG Communications, are meeting to plan their fight against the legislation.

"This would make it very difficult for us to compete," says Carolyn Berthelette of MCI Worldcom. "We'd be facing an unregulated monopoly. When you're trying to transition from a monopoly to a competitive environment is exactly the time when you need regulation."

US West is trying to get deregulated in almost every state it serves. Just last week the company announced it would sponsor a ballot initiative in Arizona to try to change state law. And last year it succeeded in convincing the New Mexico Legislature to endorse its deregulation plan, getting it through that state's Senate by one vote.

In New Mexico, both sides took to the airwaves, launching ad campaigns to win public support. Every newspaper in the state editorialized against the proposal, but a combination of US West political contributions and an unprecedented lobbying campaign helped get the bill passed. Following a public outcry and predictions that companies like MCI Worldcom would leave the state, New Mexico governor Gary Johnson vetoed the legislation.

Now Colorado -- US West's corporate headquarters -- will be the next battleground over the future of telecommunications.

Chlouber claims his bill will jump-start competition in Colorado telecommunications, even in places like Leadville that are usually last on the list of places where telecom companies want to invest. "We want to deregulate the industry and move toward effective competition," he says. "Everybody should be on notice that three and a half years from now, we're going to have a deregulated market. That should light a fire under everybody."

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Stuart Steers
Contact: Stuart Steers

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