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March 18, 2003
AG Seeks Benefits for Qwest Customers in Proposed Dex Sale

SEATTLE - To win approval of the sale of its lucrative telephone directory business, which includes the Dex Yellow Pages, Qwest Communications should make sure its Washington customers share in any of the sale's benefits, Attorney General Christine Gregoire said today.

Gregoire asked the Washington Utilities and Transportation Commission (WUTC) to require Qwest to provide customers with a one-time bill credit amounting to $147 million. The amount is based on proceeds from the proposed sale, taking into account Washington's share of Qwest's directory business.

Qwest's parent company, Qwest Communications International, last summer agreed to sell the directory business for $7.05 billion. Before doing so, however, the company must get approval from regulators in some of the 14 states where the company operates, including Washington.

Joining the state in making the recommendations were AARP and the Washington Electronic Business & Telecommunications Coalition (WeBTEC), a group of Qwest's large business customers.

Currently, Qwest's directory business earns at least $100 million a year for the company's local phone business in Washington, which helps keep local rates at current levels.

"Customers should not be forced to pay higher rates in years to come because Qwest's parent company made a business decision to sell one of its more profitable business enterprises," Gregoire said.

In papers filed with the WUTC, the Attorney General's Public Counsel section also proposed that if the company seeks a rate increase anytime in the next 20 years, it should include $103.4 million per year earned by the directory business in any calculation of the company's revenues.

Company revenue is one factor used to determine if a rate increase is justified. Adding the $103.4 million in "revenue credits" to the company's tally sheet would limit rate hikes, state attorneys say.

State attorneys also say the company, which provides local telephone service to 2.5 million business and residential customers in Washington, should also be required to continue meeting service quality standards established when it merged with US West in 2000.

Under the 2000 Qwest/US West merger agreement, the company agreed to provide customers with credits on their bills for missed installations, missed appointments and out-of-service conditions and repair problems.

In order to gain approval of the directory sale, the company should also agree to extend those guarantees through 2006, state attorneys argue.

The WUTC is scheduled to conduct a formal hearing on the proposal in May.


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