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U S West, Qwest in alliance
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May 7, 1998: 2:48 p.m. ET
Baby Bell to offer long-distance service through marketing deal
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NEW YORK (CNNfn) - U S West Inc. said Thursday it will offer long-distance services through an alliance with Qwest Communications International Inc., apparently circumventing current federal restrictions.
Under the terms of the marketing alliance, formed with the U S West Communications Group unit, customers of U S West will be able to join a plan that offers long-distance service from Qwest at 10 cents a minute. In exchange, Qwest will pay U S West an undisclosed fee per customer.
Qwest -- which became the nation's fourth long-distance provider in March through its $4.4 billion acquisition of LCI International Inc. -- said it expects the pact to add about $100 million to $200 million to its 1999 revenues.
While the landmark Telecommunications Act of 1996 calls for local and long-distance phone markets to open gradually, federal courts and regulators have prohibited Baby Bells such as Ameritech Corp. from competing with such companies as AT&T Corp. until they open their respective home markets further.
However during an interview with CNNfn, officials from U S West and Qwest signaled that current laws do not specifically prohibit sales of services by unaffiliated carriers.
"I don't think it's an issue of monopolistic considerations at all," said Joseph Nacchio, Qwest's president. "We think everything we're doing is within the rules and laws as they are currently construed," the one-time AT&T long-distance chief told CNNfn.
Officials from the Federal Communications Commission could not be immediately reached for comment.
The service will be introduced in six of U S West's 14 markets by May 11. Service will begin in the remaining markets by the end of the month.
However, U S West said the alliance won't change the company's own plans to offer its own long-distance service. U S West expects to file applications with state regulators in all 14 markets by year's end.
"We, U S West, are not allowed to be in the long-distance business today. But we wanted to make sure that we could bring the benefits of services of companies like Qwest to our customers," said Sol Trujillo, president and chief executive of U S West.
-- from staff and wire reports
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U S West
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