The Arizona Corporation Commission has hit Qwest Communications International with what commissioners believe is the largest fine ever imposed by the utility regulating panel.
On Wednesday the five-member board assessed the telephone company $9 million in fines and administrative penalties and ordered Qwest to pay another $11.7 million to competitors who were damaged by Qwest's anticompetitive actions three years ago when Qwest was attempted to enter the long distance business.
The commission order said the penalties were being imposed because the company's actions were “a willful and intentional violation” of state and federal laws. The issue stems from procedures laid out in the federal Telecommunications Act of 1996. That law allows “Baby Bell” local telephone companies like Qwest to enter the long distance business if they in turn open their local networks to long distance telephone companies that want to enter the local business.
A commission investigation showed that Qwest secretly gave some competitors favorable terms for using its network in exchange for their not opposing Qwest's application before the ACC to enter the long distance market.
Commissioner Bill Mundell described Qwest's actions as similar to “bribing a witness to not testify at a trial . . . Qwest's behavior was anticompetitive, anticonsumer and made a mockery of this commission.”
On Wednesday the commission agreed to reduce Qwest’s fine to $9 million from a proposed $11.2 million after Qwest Arizona president Patrick J. Quinn said the company will not challenge the penalties in court. “We have had to pay a high price for a lot of things done by people who are no longer with the company,” Quinn said after the meeting. “I need to get this behind us so we can move forward.”
The commission voted 4-0 to approve the penalties. The fifth commissioner, Mike Gleason, had to leave the session before the final vote, but he clearly was unhappy with the commission's action. Earlier in the meeting he proposed that the commission remove all references to “willful and intentional” misconduct from the order, saying the language would give Qwest an opening to challenge the ruling in court and delay its implementation “for years and years.”
That move was strongly opposed by the other four commissioners. “It is imperative that we make clear to the world that what (Qwest officials) did was willful, wrong and illegal,” commissioner Kris Mayes said. “It's in the public interest to deter Qwest from violating the law again.”
The Arizona commission is the fourth regulatory agency to propose penalizing Qwest for the secret deals. The company paid a $7.5 million fine to settle the case in Colorado, and the Federal Communications Commission is proposing a $9 million fine. Minnesota regulators imposed a $25 million fine, but Qwest is challenging that penalty in court. The controversy didn't prevent Qwest from entering the long distance business in Arizona in December. But the Arizona commission was the last in Qwest’s 14-state service territory to approve the company's application.