In CenturyLink Takeover of Qwest, Consumer Focus Seen in Mostly Positive Light
CenturyLink's takeover of Qwest, with a smaller telco buying the Bell serving much of the western U.S., worked out fairly well for consumers, we found. The same was true with broadband deployment after other deals (see 1508140026">1508140026). But FairPoint's purchase of Verizon's wireline systems in three New England states bedeviled consumers, and the company still seems to be struggling.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
In approving the 2011 takeover of Qwest, the FCC required CenturyLink to meet broadband deployment metrics in Qwest’s 14 legacy states, encourage broadband adoption, preserve business customer rates and uphold wholesale performance. As of December, CenturyLink said it had surpassed every five-year FCC broadband deployment milestone, extending 1.5 Mbps service (downloads) to 90.6 percent of in-region living units, 5 Mbps to 70.5 percent, 12 Mbps to 59.3 percent and 40 Mbps to 37.1 percent. CenturyLink also said 72,082 low-income customers had taken broadband service and 3,113 customers had bought computers under its Internet Basics discount program, which also included outreach and digital training efforts, including in various languages. And CenturyLink recently reported on its progress in consolidation of its ordering and billing systems.
Service quality has been a frequent issue because Qwest targeted enterprise customers more than residential customers, said CenturyLink Senior Vice President John Jones. “We put more people on the ground” to increase “local presence,” he said. The company also brought more of a “competitive spirit and strong consumer play” through its broadband expansion and Prism IPTV service, he said, though there are still many extremely high-cost, low-density markets that create broadband challenges. “People want it sooner and faster and ask ‘why don’t you have it here,’” he said. “But we think we do a good job overall.”
State officials offer mostly positive assessments or at least cite few problems. Brian Thomas, Washington Utilities and Transportation Commission acting policy director, said CenturyLink’s takeover of Qwest "hasn't gone badly," though he can't “give it as glowing a report” as Frontier’s buy of Verizon systems, “which needed more attention.” He said CenturyLink had met state requirements to deploy broadband and invest $80 million over four years. Consumer complaints haven’t grown, he said, though after going down, returned to almost the same levels as pre-deal in 2010. He said there were a couple of service-quality issues, including a 911 outage in 2014 involving a vendor to CenturyLink that's “being resolved.”
The CenturyLink takeover went reasonably well in Nebraska, said Gene Hand, Public Service Commission telecom director. “It’s been good. No big fires that I know of,” he said. “I think they’ve been a little quicker to respond to concerns,” he said, noting CenturyLink’s origins as a small rural telco. “What we’re hearing about is broadband availability, period,” he said, hoping CenturyLink will take FCC Connect America Fund dollars for the state. Cox Communications is taking market share in Omaha and elsewhere, but rural deployment is a challenge for any carrier, including cable, he said.
Arizona Corporation Commission takeover conditions required CenturyLink to invest at least $70 million in broadband, not recover merger costs through retail rates or wholesale fees, maintain or improve on Qwest’s complaint record and uphold wholesale performance, among many conditions. Complaints increased in the second and third years post-merger, exceeding the level of the last year under Qwest, but wholesale performance improved, retail service quality “stayed fairly consistent,” and CenturyLink submitted information indicating it met its investment commitment, the ACC found.
The Qwest-CenturyLink transition was “very smooth” in Idaho with no appreciable increase in complaints, PUC Policy Strategist Gene Fadness said. The same was true for Verizon-Frontier, he said. The transition went “fairly smoothly” in South Dakota, PUC Counsel Rolayne Wiest said. The Iowa Utilities Board has received some complaints from CenturyLink customers, but not a high volume, said Don Tormey, manager, IUB customer service and communications. "CenturyLink has been responsive to our calls on behalf of customers," said Iowa Consumer Advocate Mark Schuling, who added that his office did not see the merger "as an exacerbating factor in any area."
FairPoint Stumbles
By all accounts, FairPoint stumbled badly in taking over Verizon’s systems in Maine, New Hampshire and Vermont. “FairPoint has been a disaster,” said Debbie Goldman, Communications Workers of America telecom policy director. The company had problems transitioning customers to its billing and other operational systems and it lost customers; its debt load became unsustainable as the economy went into recession, forcing it to undergo restructuring in bankruptcy; and while it later emerged from Chapter 11 and the crisis eased, it still has struggled, state officials said.
FairPoint served 308,000 access line equivalents when it proposed to take over the Verizon systems with 1.5 million access lines in the three states in 2007, its application said. “This was a very small company taking over a much bigger operation. Financially, logistically, operationally they just weren’t prepared for the changeover,” Maine Public Advocate Tim Schneider said. “The messy start was a big deal for our customers” who had to deal with billing and other service problems, he said. After bankruptcy, FairPoint negotiated an easing of some regulatory conditions, including for broadband deployment, he said. Since then, FairPoint has only met some service-quality standards that accompanied a phone deregulation act passed by the Maine legislature, and it had to deal with a labor strike, he said.
The “botched" Verizon-FairPoint handoff resulted from “new systems that simply didn’t work,” said James Porter, Vermont Department of Public Service telecom director. “This was about the time we had a cable company providing voice, so FairPoint didn’t get off to a good start,” he said. “They certainly had too much debt.” The company eventually stabilized the situation to some extent, but it still seems to have struggled, he said, noting further customer losses, a 911 outage (see 1508120056) and the union work stoppage. The latter caused the most complaints since the Verizon cutover, he said. “FairPoint has built out a good bit of broadband in a timely manner, so we’ve been pleased with that,” he said. “And except for their difficulties in clearing troubles in a 24-hour period, I want to say they’re on par or better than Verizon was. But that’s not the bar I would aspire to.”
“While we faced some challenges at cutover in 2008, today we prefer to focus on our future,” a FairPoint spokeswoman emailed in response. “We are excited about our current course which includes a stronger-than-ever focus on the customer experience. Recent successes include launching Advanced Digital Services, opening two Data Centers and continuing to enhance and extend our network to offer faster data speeds to both residential and business customers.”