Qwest acquired US West last June, and it must gain regulatory approval to offer long distance in US West's 14-state region. The fiber-optic carrier must prove to federal and state regulators that competitors have equal access to its phone lines. Other Bells, such as SBC Communications and Verizon Communications, face similar regulatory hurdles.
What makes Qwest's situation interesting is that the company already offers long distance in other markets over its touted fiber-optic network. The marriage of Qwest and US West offers a glimpse of how a relatively new company and an old-world telecom player can coexist under the same roof.
Denver, Colo.-based Qwest said that it is participating in workshops with local regulators and competitors as well as running tests of its network to ensure that it complies with regulatory guidelines set by the Telecommunications Act of 1996.
"We expect to have approval in all of our states in early 2002," Steve Davis, Qwest's senior vice president for policy and law, said in a conference call.
The company started testing on Tuesday its operational support systems (OSS) in 13 states with Arizona conducting its own tests independently but on a similar timetable.
The purpose of the tests, which the company hopes to conclude this summer, is to assure that Qwest has systems in place that will allow local phone competitors, sometimes known as CLECs (competitive local exchange carriers), to compete with Qwest in retail markets.
CLECs buy wholesale data and voice services from Qwest then compete with Qwest by reselling them to retail customers in local markets.
KPMG and Hewlett-Packard designed the tests to investigate whether CLECs have adequate access to Qwest's network and can serve the retail market in the same manner that Qwest serves its own retail customers.
"We will literally have 12 to 14 states in which we can prove compliance sometime around the end of the summer," said Davis, who could not say which states would finish the process first. Qwest will file for approval with the Federal Communications Commission after the tests are completed.
Qwest is also participating in workshops run by local state regulators to allow competitors to express their concerns regarding open competition. The company says that 37 of the proposed 50 workshops have been completed.
Davis also said that the company will continue to serve its competitors in the wholesale market after the tests conclude. Qwest voluntarily put in place a performance assurance plan, a penalty schedule that requires the company pay fines to competitors if the level of service to CLECs falls after the tests end.
Davis said the company actually considers sales to its wholesale competitors a viable market segment. "Qwest has considered wholesale markets a significant opportunity for a long time," he said.