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Court halts U S West deal
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June 4, 1998: 6:58 p.m. ET
Federal court wants FCC to review legality of U S West-Qwest service
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NEW YORK (CNNfn) - A federal court issued a temporary injunction Thursday to suspend U S West Communications Group from offering long-distance service from Qwest Communications International Inc.
The U.S. District Court in Seattle ruled that the telecommunications companies could not sign any new customers for its joint telephone services until the Federal Communications Commission has had an opportunity to assess the legality of the deal.
In early May, local carrier U S West and long-distance provider Qwest announced they would join forces to offer local and long-distance telephone services in U S West's 14-state region.
The following week, AT&T Corp. and MCI Communications Corp. filed a suit in federal court, alleging the alliance violated the Telecommunications Act of 1996.
U S West said it will seek an expedited review from the FCC.
A U S West spokesman said while the injunction prohibits the company from signing new customers to Qwest's long-distance services, it will continue to serve the 130,000 customers who already have signed up.
Under the terms of the marketing alliance, U S West customers can join a plan that offers long-distance service from Qwest at 10 cents a minute. In exchange, Qwest pays U S West an undisclosed fee per customer.
The Telecommunications Act prohibits regional Bell operating companies such as U S West from offering long-distance services within their region until they further open the market to competition.
U S West said in a statement that it is complying with the letter and the spirit of the law because Qwest provides the long-distance service and collects the revenue.
Shares of U S West Communications Group (USW) closed at 50-13/16, up 3/16. Qwest (QWST) shares finished at 31-9/16, down 1-1/8. 
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