Qwest accuses SBC of anti-competitive practices

Qwest is charging SBC with anti-competitive practices, including strong arming carrier business partners not to entertain acquisitions offers from "restricted" SBC competitors, such as Qwest.

In a letter to the FCC this week, Qwest complained about the alleged SBC practices coming just three months prior to the expected closing of SBC’s purchase of AT&T, and encouraged the FCC to put a halt to them. The charges come as FCC Chairman Kevin Martin is looking for the commission to approve the SBC/AT&T and Verizon/MCI mergers by next month.

"In significant commercial transactions with other carriers, SBC appears to be expressly prohibiting those carriers from entering into mergers with certain specified competitors, upon pain of SBC canceling those contracts," wrote Qwest General Counsel Robert Connelly in the letter. "The practical result is to confine the ability of such competitors to consolidate and achieve sufficient scale to compete effectively with SBC/AT&T.

" It is incumbent on this Commission to remedy this situation through adequate conditions on the merger," Connelly continued.

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Qwest is charging SBC with anti-competitive practices, including strong arming carrier business partners not to entertain acquisitions offers from "restricted" SBC competitors, such as Qwest.

In a letter to the FCC this week, Qwest complained about the alleged SBC practices coming just three months prior to the expected closing of SBC’s purchase of AT&T, and encouraged the FCC to put a halt to them. The charges come as FCC Chairman Kevin Martin is looking for the commission to approve the SBC/AT&T and Verizon/MCI mergers by next month.

"In significant commercial transactions with other carriers, SBC appears to be expressly prohibiting those carriers from entering into mergers with certain specified competitors, upon pain of SBC canceling those contracts," wrote Qwest General Counsel Robert Connelly in the letter. "The practical result is to confine the ability of such competitors to consolidate and achieve sufficient scale to compete effectively with SBC/AT&T.

" It is incumbent on this Commission to remedy this situation through adequate conditions on the merger," Connelly continued.

Connelly requested the FCC to look into contracts between SBC and WilTel, and SBC and Time Warner Telecom. He said the contracts restricted the carriers' abilities to merge with "blacklisted" companies.

"The commission should investigate whether SBC and AT&T are using their massive marketplace clout to make it difficult or impossible for major competitors such as Qwest and others to combine in order to compete more effectively against the merged company," Connelly wrote in his letter.

An SBC spokesman says, "This filing is a sad, desperate act by one of our competitors who is afraid of having a vigorous competitor in their own backyard.  The fact of the matter is, SBC filed its application for merger approval at the FCC on February 21st and interested parties have had all spring, and all summer, to make their points of view known.  Obviously, Qwest has read recent news reports speculating about federal action on the merger and this is an 11th hour act of desperation on their part. 

"Like any business that is choosing a supplier with whom it will spend hundreds of millions of dollars, we would like to choose who we want to buy certain services from, but that is hardly remarkable. On the contrary, it is a common and standard commercial practice.  In fact, it is so common that Qwest itself is party to contracts that contain similar provisions - for example, Qwest and Sprint PCS agreed to a similar provision in their contract.

"We are confident that the FCC and the Justice Department, after an exhaustive and careful review of the facts, will determine that the merger of SBC and AT&T will benefit consumers - and many customers have gone on record in support of the merger for this reason."

Qwest is looking to acquire smaller carriers or certain assets of smaller carriers in order to better compete with the SBC/AT&T and Verizon/MCI unions. Qwest is reportedly sizing up XO Communications as well as Time Warner Telecom.