US West loses state regulatory fight

The Baby Bell will still have to answer to New Mexico regulators over the rollout of phone services, as the state's governor vetoes a controversial bill.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
3 min read
US West has lost a fight to free much of its business in New Mexico from state regulatory control--a development that will help competitors, but may slow the spread of high-speed Net services.

State governor Gary Johnson vetoed a sweeping US West-backed deregulation bill late yesterday, saying the bill would have allowed the dominant local phone company to keep its near-monopoly power.

"I believe that if I were to sign this bill there would be a loss of competition and accordingly less opportunity for our citizens to experience the technological advances of the future," Johnson said following his rejection of the bill.

But if the veto does protect competition in state telephone markets, it also will likely slow the spread of Internet technology in a state where the status of high-speed services already trails much of the rest of the country.

US West had asked state officials to remove regulations over its advanced data services, as it claimed those rules were stifling the growth of high-speed Net access in the state.

In return, the company had offered to drop telephone prices in some markets, invest $40 million in state phone networks, and roll out high-speed digital subscriber line (DSL) Internet service for the first time, if the bill was passed. DSL is a high-speed Net access option that uses traditional phone lines.

"This would have allowed us to invest in communities where we just couldn't make the numbers work before," said company spokesman Bill Meyers. "We could make the numbers work through this legislation."

Now the company says it isn't sure when it will roll out advanced Internet services to the state.

"Over the next couple of weeks we'll sit down and determine what's best for US West and for New Mexico," Meyers said. "We've got to sit down and figure out what's next, and whether DSL is in their future."

New Mexico, with its highly rural areas and low population density, is emblematic of the problems much of country's non-urban regions are having in keeping up with the pace of communications advances.

US West is ahead of the other big local phone companies in rolling out DSL service in most of its service area. New Mexico is the only state out of 14 covered by the Baby Bell, however, where DSL hasn't been introduced.

Company officials say this is the fault of state regulators, who have asked US West to give up proprietary pricing information that no other state had required. Until the regulators back down from this position, the company can't roll out the service, executives have said.

Several competing companies, such as MCI WorldCom, AT&T, and E.Spire have begun rolling out telephone and business data services, but these services have largely been concentrated in Albuquerque, the state's largest city. Some of these companies offer ISDN, but none have yet offered DSL beyond small-scale trials.

AT&T has said it would upgrade its cable TV infrastructure inherited from Tele-Communications Incorporated in many of the state's biggest markets. But that process is unlikely to be completed before next year, and analysts say AT&T will likely focus on bigger, more lucrative markets first.

ISPs and other groups that opposed the bill on concerns that US West has abused its market position in the past, are lobbying for new state incentives to help competitors roll out advanced Internet services. The governor has taken a personal interest in the DSL issue, they note.

But until US West or regulators back down, the short-term outlook for high-speed Net access in the state is dim.

"Right now, as far as DSL is concerned, US West is the only game in town, and they don't exist yet," said Hank LeMieux, president of the New Mexico Internet Professionals Association.