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Denver Post
Qwest unveils long-distance in 8 states
Wednesday, January 08, 2003 - Qwest on Tuesday began offering long-distance service in eight Western states for the first time in two and a half years, unveiling calling rates of a nickel to a dime a minute.
Qwest's debut of long-distance service came roughly 30 months after federal law required it to divest its long-distance business in 14 states after its June 2000 merger with US West. Denver-based Qwest still offers long-distance in the other 36 states. Qwest on Tuesday debuted its long-distance service in Colorado, Wyoming, Nebraska, Iowa, Idaho, North Dakota, Utah and Washington. It will enter a ninth state, Montana, as soon as regulators there approve its rates. Consumer advocates and long- distance industry observers described Qwest's rates as similar to those of its largest competitors. Qwest's offers are available only to customers who already use Qwest's local-phone service. "Qwest's long-distance rates are competitive with the larger carriers, like AT&T, Sprint and MCI," said Dian Callaghan, administrative director of the Colorado Office of Consumer Counsel. "However, if you shop the smaller resellers, you can get a better deal." More specifically, Callaghan mentioned rates of 4.9 cents a minute for
state-to-state calls from small resellers such as Americom and Everdial.
Customers willing to dial a few extra digits can get even lower rates
through calling cards from Sam's Club or Costco, she said. Qwest intends to differentiate itself from its long-distance competitors by focusing its advertising on its ability to offer customers several telecommunications services on a single bill. The company will begin an ad campaign next week trumpeting its long-distance service. "What we're able to do here is offer the simplicity of local service, wireless, high-speed Internet and now long-distance on one bill for our customers," said Annette Jacobs, president of Qwest's consumer markets group. Federal law prohibits Baby Bells from offering long-distance in states where they already dominate local-phone service. Baby Bells can get federal approval to offer long-distance in those states only after they prove they allow competition in the local-phone market. The Federal Communications Commission gave Qwest approval in its first nine states on Dec. 23. For Qwest, the return to the long-distance market in the nine states was long awaited. Former chief executive Joe Nacchio initially forecast that Qwest could reach that goal in late 2000. Yet due to several delays Qwest took two years longer than anticipated to qualify. "We at Qwest are very anxious to finally have the opportunity to compete in this market again," Jacobs said. Qwest's long-distance offerings range from a flat, 10-cents- a-minute plan with no monthly fee or minimum to a 5-cents-a-minute plan for state-to-state calls with a $10 monthly minimum. The company also debuted unlimited long-distance service for $30 to $35 per month, depending on how many other Qwest services a customer orders. For small businesses, Qwest introduced rates of 5 cents to 6 cents per minute. The company cannot offer long-distance service to large businesses in the former US West states until it delivers to the U.S. Securities and Exchange Commission audited financial reports for its second and third quarters of last year. All told, analysts predict Qwest can gain an additional $1 billion to $2 billion in annual revenue once it gets federal approval to sell long- distance in all 14 of the former US West states. Baby Bells allowed into the long-distance market in their home states generally capture 20 percent to 25 percent of that market within a year or two. The infusion is a much-needed one at Qwest. The company carries roughly $20 billion in debt and has seen its revenue and cash flow falter amid the economy's weakness. Trading of the company's stock closed Tuesday at $5.93, unchanged from the previous day. "This gives Qwest an incredible boost," said Ross Sealfon, an analyst with market-research firm IDC Corp. "Really, the only competitive advantage that alternative carriers had was that Qwest couldn't offer long-distance. Now that (Qwest's) prices are on par and they have the same products everyone else does, it will definitely decrease the number of people leaving." For consumers, Qwest's long-distance offerings are expected to bring savings. Qwest estimates customers can save $70 to $170 a year through ordering its long-distance. Qwest's rivals remained unimpressed on Tuesday with Qwest's re-entry into the long distance market. "It's really just another player in an already very competitive marketplace," AT&T spokesman Tom Hopkins said. |