• United States
Senior Editor

MCI, Qwest reach pricing agreement

Jun 01, 20044 mins

MCI and Qwest have announced the first wholesale pricing agreement between an incumbent owner of telecommunications networks and a major competitor, but other companies complained about being left out in negotiations requested by the Federal Communications Commission.

MCI and Qwest have announced the first wholesale pricing agreement between an incumbent owner of telecommunications networks and a major competitor, but other companies complained about being left out in negotiations requested by the Federal Communications Commission.

The agreement between MCI, a CLEC, and Qwest, one of the four incumbent owners of much of the telecom networks in the U.S., came late Monday, after five weeks of mediated negotiations. Negotiations between CLECs and the incumbents, often called the regional Bells, became necessary following a March court ruling overturning much of the FCC’s network-sharing rules.

MCI and Qwest praised their agreement as one that will benefit customers. “It has been MCI’s position that good faith commercial negotiations can result in agreements that reflect the changing industry landscape and avoid complex regulatory proceedings and litigation,” Michael Capellas, MCI president and CEO, said in a statement. “This agreement proves that a negotiated outcome is not only possible, but mutually beneficial.”

Since the U.S. Court of Appeals for the District of Columbia Circuit overturned in March much of the FCC’s rules governing the sharing of local networks owned by the four incumbents, the FCC has pushed for the two sides to come to agreements on the prices CLECs pay to use those networks. The FCC asked MCI and AT&T to negotiate with the incumbents this past weekend, but no new agreements were reached, beyond the MCI and Qwest agreement, which was in progress before the weekend meetings.

The weekend negotiations yielded accusations from AT&T that the incumbent Bells didn’t take the negotiations seriously, and complaints from some smaller CLECs about being left out of “secret” negotiations.

XO, a CLEC based in Reston, Va., issued a statement Tuesday protesting what it called “secret and exclusive” negotiations. XO accused the FCC of allowing negotiations between “a few select companies” that will reset the prices many consumers pay for telecom services.

“The secret negotiations favor the monopolistic interests of the mammoth ‘Baby Bells’ at the expense of consumers and competitive carriers and, in my opinion, would result in billions of dollars in rate increases for consumers and businesses,” XO CEO Carl Grivner, said in a statement.

An FCC spokesman said the agency has no comment on criticism of the Memorial Day weekend negotiations.

AT&T also complained about the negotiations, saying “numerous” proposals it made were rebuffed by the incumbent Bells. “The only agreement that most of the Bell monopolies seemed interested in striking was one that increased prices substantially on consumers and small businesses immediately,” an AT&T spokeswoman said in an e-mail statement.

Verizon praised the weekend negotiations by saying the two sides moved closer to a resolution. Tom Tauke, executive vice president of public affairs at Verizon, said in a statement that the negotiations resulted in “some movement.”

But Tauke also criticized the FCC for its continuing decision to seek a stay of the court’s March order. “The negotiations are frustrated by the position of the government,” Tauke said in his statement. “As long as the government holds out the hope of preserving the status quo, it is disappointing but hardly surprising that AT&T and MCI would delay concluding commercial agreements.”

MCI and Qwest, however, praised their mediated negotiations in a joint press release. Their agreement maintains existing prices that MCI pays through Dec.31, then creates a transition period to MCI’s own facilities, with incremental price adjustments, through January 2007.

The monthly rate MCI pays Qwest for wholesale network elements will increase an average of less than $5 per customer by the end of the transition period, according to an MCI spokeswoman. The pricing agreement includes Qwest DSL services, as well as other services not previously available with a combined wholesale service, including Qwest voice messaging services.