Qwest Faces Off Against ‘Cheating’ CLECs Before the Florida Public Service Commission

CLECs subjected Qwest to “unjust” and “discriminatory” rates, an executive of the telco’s parent told a Florida Public Service Commission hearing Tuesday. Tw telecom and BullsEye Telecom did that for “many years,” said CenturyLink Wholesale Staff Director William Easton. AT&T faced similar circumstances as Qwest, despite AT&T receiving cheaper rates than Qwest, he said: The two telcos should get the same rates.

A CLEC argument that the AT&T rates were granted “under duress” doesn’t excuse discriminatory behavior, said Easton. The CLECs should have then brought the action to the PSC as they did in Minnesota and Iowa, he said. “Once those rates are offered to AT&T, they should be offered to QCC,” he said of Qwest Communications Corp., which CenturyLink has acquired. Qwest is “billed in the millions of dollars” in Florida over such agreements, so the complaint isn’t “trivial,” said Qwest attorney Adam Sherr. “Secret preferential pricing ... undoubtedly skews any market.” These anticompetitive agreements have existed for many years, since 2001 in one case and still ongoing in some, Sherr said. Qwest complained to the Florida PSC in 2009, and has since voluntarily dismissed 15 parties initially also targeted.

"It is really up to the cheaters to acknowledge to the customers they are cheating,” said CenturyLink Public Policy Organization Director Lisa Hensley Eckert. The cheaters comprise AT&T along with “their CLEC partners,” she said. Qwest is entitled to refunds from the last several years, as though it were charged discounted AT&T rates, said Easton.

Tw and BullsEye fought back. Qwest only has “theoretical arguments,” said Matthew Feil of Gunster Law, representing tw telecom. “Please note with attention Qwest’s words” about its “alleged harm,” which contain words like “may,” “could” and “probably,” he said. He called Qwest’s complaint “unproven harm.” The complaint doesn’t hold up to the CLECs’ arguments, he said, but before that comes the question of whether the PSC has authority. “We maintain that you don’t have jurisdiction,” he said. BullsEye painted Qwest as uninterested in seeking knowledge of these other rates and in negotiating. “Qwest simply voluntarily paid the price list rates without dispute,” said Klein Law Group’s Andrew Klein for BullsEye. Intrastate service is offered on a contract basis and with discounts, he said. Ignorance of other lower rates is due to “Qwest’s own lack of effort,” Klein said.

The tw and BullsEye attorneys picked at Qwest’s arguments over more than seven hours in cross examinations, questioning when and how a CLEC should be compelled to make different intrastate switched access rates and agreements available. Feil presented a printed Google October search result that showed tw’s agreement with AT&T and asked Eckert whether anyone at Qwest had tried Googling what were public agreements. She said only that she personally had not. She first became aware of Qwest’s agreements around 2007 when the bills came in and she and her colleagues realized that these agreements didn’t represent the best “business opportunity,” she said. When Kansas State University economist Dennis Weisman argued on the anticompetitive nature of the Qwest proposal, Klein implied that Weisman intended to create entirely new rules, far beyond what was in the statutes. “They're asking you to create a new contract, with fictional terms,” said Don Wood, a telecom consultant for tw. “They want you to order it and to make it retroactive back to 2002. ... Qwest is asking you to order discrimination in their favor."

Qwest has lodged similar complaints on the same grounds in other states throughout the last several years. AT&T’s “self-help mechanism was inappropriate,” Eckert said of a past Qwest lawsuit against the telco for engaging in these rate practices. Easton cited Qwest successes in Minnesota and Iowa.

Florida CLECs have fought Qwest arguments in direct testimony and in other objections throughout the last several months. “Qwest’s claims must be rejected, first because Qwest is not by any stretch of the imagination in ‘like circumstances’ to AT&T,” tw argued in the PSC’s Oct. 17 prehearing order (http://xrl.us/bnvhho). “Nor is Qwest the victim of ‘undue or unreasonable’ treatment vis-a-vis AT&T, considering AT&T agreed to a multi-million dollar take-or-pay obligation.” The telco described a 2001-2008 agreement with both AT&T and Qwest, but the “Qwest agreement does not include a revenue commitment (in other words purchases are made ‘as needed'), nor does it include switched access."

Two other companies, Ernest Communications and Flatel, are part of the proceeding but have failed to participate, said the prehearing order. Another party, Navigator Telecom, has lapsed in participation. Their lack of participation doesn’t excuse them but has resulted in their lack of inclusion, the PSC said. The hearings will continue Wednesday and Thursday, according to the PSC schedule. PSC staff didn’t weigh in with positions in the prehearing order and isn’t scheduled to give a recommendation until Jan. 16. The PSC is scheduled to give a standard order in late February.