The combination will give Qwest, the fourth largest U.S. long distance phone company, a local phone network, lowering the amount it pays other carriers to complete its calls and helping it compete with other local phone companies such as Bell Atlantic.
US West is restricted from offering long distance service in its territory until it proves to federal regulators that its local markets are open to competition. The Federal Communications Commission will likely force Qwest to shed its long distance customers in US West's 14-state territory since US West is unlikely to win long distance approval by the time the merger closes, analysts said.
"I think ultimately it would be approved with some conditions," said Paul Glenchur, a telecommunications policy analyst with Charles Schwab's Washington Research Group.
US West and the other four regional phone companies--Bell Atlantic, SBC Communications, Ameritech, and BellSouth--have so far been unable to convince the FCC that they've met the market-opening requirements of the telecommunications act. US West is widely viewed by industry observers and analysts as running last in the race to break into long distance.
Though the FCC will ultimately approve the transaction, "It'll be lengthy and messy," said George Reed Dellinger, a telecommunications policy analyst with Washington Analysis. "Here's a large territory where some of these states will be among the last states that'll open up to competition."
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