Qwest Conflict Seems to Sink SkyWi Sale to Telekenex
A move by SkyWi to sell all its VoIP assets to Telekenex foundered on the shoals of the VoIP provider’s history of conflict in New Mexico and elsewhere with incumbent Qwest. After months of bitter exchanges with Qwest that included a New Year’s Eve shutdown by Qwest of its networks and two directives by the New Mexico Public Regulation Commission, SkyWi was on the verge of selling its VoIP business to the San Francisco-based CLEC, SkyWi CEO Alan Witters told us in an interview. But the sale was undone.
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“We were scheduled to close Friday on the sale of our VoIP assets,” Witters said, not disclosing the transaction’s terms. “On Tuesday, we went public about having a memorandum of understanding with Telekenex on a timely transfer of those assets to them.” On Thursday, as part of the imminent deal, Telekenex officials appeared before the New Mexico commission at its open meeting, Witters said, to find that Qwest had submitted what he characterized as “a 25-page motion, which the PRC voted to approve, against any action by SkyWi for relief.” Witters called the Qwest filing “an imaginary motion against submissions that we did not make.” No SkyWi officials attended the meeting, Witters told us.
“For three hours, Telekenex was vilified by the PRC,” Witters said. “In effect, they were run out of town. In the transcription, one of the commissioners says, ‘I don’t even know if we want a company like you in New Mexico,'” the VoIP company CEO said. “It’s the weirdest thing I've seen in 30 years in the business. Telekenex came back and told us, ‘The deal’s off. We can’t do business in New Mexico.'”
According to Witters, during the meeting commission staff checked the files for documents registering Telekenex in the state and, finding none, declared that the company was not authorized to provide phone services in New Mexico. He does not know if the deal with Telekenex can be revived, he said.
“We'll try to get an apology from the PRC, or maybe a welcome letter,” Witters said. “I've been in touch with the governor’s office, the attorney general, and the commission. I'm also talking to the Department of Justice, because the PRC has no governmental authority over it. Justice is looking at the case.”
SkyWi is to have its day in court Wednesday on a request for preliminary injunction that would bar Qwest from cutting off network services to its customers until the companies have resolved a dispute over bills and payments. Qwest says SkyWi is deep in arrears. SkyWi accuses Qwest of trying to crush it. Against this backdrop, SkyWi sued, alleging antitrust violations and asking the Albuquerque U.S. District Court to issue the injunction. Most recently, a shutdown order by Qwest cut off 200 SkyWi VoIP lines, triggering an outcry by the smaller company (CD Jan 30 p6).
SkyWi is girding itself for the Wednesday hearing, Witters told us. “If we do not prevail, or our request is dismissed, we expect to end up with a 10-day disconnect notice from Qwest,” he said. “We are out of the physical networking business now. We have moved 98 percent of our customers off Qwest circuits.” SkyWi is using alternate carriers, with Qwest perhaps providing the last mile of service but SkyWi’s name not on the record, he said.
Qwest also is anxious for the hearing, spokesman Mark Molzen told us. “We haven’t had any contact with them” since the recent 200-line cutoff, he said, voicing amazement at the latest turn of event. “It all comes down to whether you pay your bills or not,” Molzen said. “They are a customer of ours who contracted to pay for a service, and we want to be paid for the service we provide. I know I sound like a broken record, but this is not about anything else. We have no reason to believe we won’t be in court on Feb. 11. This is an action that SkyWi requested, and we look forward to it.”
Telekenex CEO Anthony Zabit did not respond to phone calls to his company’s San Francisco headquarters seeking comment. Responding to an e-mailed request for comment about Monday media reports of the SkyWi/Telekenex deal’s collapse, a spokesman for the New Mexico Public Regulation Commission said, “The NMPRC has no comment at this time… since we have not heard of any such reports coming to the NMPRC today.”