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FOR IMMEDIATE RELEASE
December 28, 2010
Attorney General’s Public Counsel reaches agreement on conditions for Qwest-CenturyLink merger

SEATTLE – The Public Counsel Section of the Washington State Attorney General’s Office has reached an agreement with Qwest, CenturyLink, and the staff of the Washington Utilities and Transportation Commission (UTC) on a set of conditions to address concerns with the companies’ proposed merger.

“The proposed agreement is a good one for the citizens of our state,” said Senior Assistant Attorney General Simon ffitch, head of the Public Counsel Section. “The conditions that were negotiated – including a substantial commitment to broadband investment and significant rate freezes – will help ensure there is no harm to the public interest, which is the UTC’s guiding principle when considering mergers.”

The settlement agreement, filed late Thursday, Dec. 23, is subject to review by the commission. Under the terms, Qwest and CenturyLink have agreed to invest a minimum of $80 million in broadband infrastructure in Washington over the next five years. A significant percentage of the investment is dedicated specifically to improving the availability of broadband in areas of Qwest and CenturyLink territory where service isn’t available or speeds are insufficient.

Other key highlights of the settlement from the Public Counsel perspective include:

  • Basic residential telephone rates are frozen for at least three years for all customers, as are basic business rates for CenturyLink business customers.
  • Qwest basic business rates, currently “price deregulated,” are limited to a $1 increase (up to a $30 per month maximum) for the next three years.
  • Qwest and CenturyLink can’t collect any of the costs of the merger from their customers in rates, including any transaction, branding, integration, or increased management costs. These costs will be paid by shareholders. The companies have agreed not to request in the future a higher rate of return than would have applied without the merger.
  • The merged company will continue to offer a “DSL only” plan.
  • The merged company will continue to honor terms of service for plans purchased before the merger; for example, “price for life” contracts.
  • CenturyLink agreed to mirror Qwest by adopting a $25 credit for a missed appointment and a $5 credit for service failures.
  • CenturyLink and Qwest agree to extensive reporting requirements to allow the UTC to track the impact and implementation of the merger. They will provide information on financial conditions, service quality, broadband deployment, capital expenditures and integration of the companies.
  • The companies commit to better promoting Lifeline, a program that offers reduced phone bills for low-income customers, and to improve how they handle complaints from Lifeline customers.

Qwest and CenturyLink have estimated that the merger of the two companies will generate approximately $625 million in synergy savings on a national basis. The Washington agreement requires that the companies track and report achieved synergies in Washington.

The settlement agreement also provides for a full financial and regulatory review of the post-merger company no later than four years from now. In this proceeding, the UTC would review company earnings levels, synergy savings, broadband deployment achieved, consumer rates and the appropriate level of regulation for the company’s services.

Not all parties participating in the merger case before the UTC have reached agreement with Qwest and CenturyLink. Those parties may recommend additional conditions.

The three-member UTC, which is not bound by the staff recommendation, is expected to make a final decision on the merger request in early 2011.

PUBLIC COMMENTS
The UTC will hold hearings on the merger Jan. 5-7, 2011. The public may comment at 5:30 p.m. Jan. 5, 2011, in the Commission’s Hearing Room, Richard Hemstad Building, and 1300 S. Evergreen Park Drive, Olympia.

Members of the public can also submit written comments through Jan. 7 to UTC, P.O. Box 47250, Olympia, WA, 98504 or via e-mail to comments@utc.wa.gov. Include your name and mailing address and docket no. UT-100820.

The full settlement agreement is available at utc.wa.gov by entering 100820 in the docket lookup box.


Media Contacts: Kristin Alexander, Media Relations Manager - Seattle, (206) 464-6432, kalexander@atg.wa.gov
Simon ffitch, Senior Assistant Attorney General, (206) 389-2055
Editor’s Note: The spelling of Simon ffitch’s name is correct. The surname is spelled with two lowercase f’s.
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