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Qwest is the fourth-largest U.S. long-distance phone company.
It counts Willamette Week as one of its customers.
Another
so-called Baby Bell, BellSouth Corp., owns 10 percent of
Qwest, further complicating the proposed deal. As late as
June 9, Qwest and BellSouth were said to be entertaining
a
merger.
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Here we go again.
Sunday evening the news wires were buzzing with word of
a new takeover offer for US West, the 14-state telecommunications
company that provides local phone service to most Oregonians.
This time the suitor is Qwest Communications International
Inc. Like Global Crossing Ltd., the Bermuda company that
offered to buy US West for $37 billion in March, Qwest is
a young, rapidly growing outfit that wants to become, in
the words of chairman and CEO Joseph P. Nacchio, an "Internet
communications powerhouse."
Qwest is controlled by Denver business tycoon Philip Anschutz.
When Anschutz took control of the Southern Pacific Railroad
in 1988, he used the railroad's rights of way to build an
advanced fiber-optic network that has the potential to provide
electronic communications globally.
Qwest, which has annual revenues of $2.4 billion, let loose
its bombshell Sunday, when it offered $55 billion in cash
and stock (plus the assumption of $11.4 billion in debt)
for US West and Frontier Corp., a large American long-distance
carrier.
Since the offer, Qwest's stock price has dropped; early
this week, the value of the deal was about $42 billion.
What does all this mean for the people who really count--US
West's customers?
For one thing, it represents clear vindication for the
company's critics, both here and elsewhere, who have become
increasingly vocal over US West's failure to make adequate
investments in its network. The above-market offers, by
both Global Crossing and Qwest, simply confirm that our
phone company is underserving its customers. The two telecom
upstarts are betting they can make US West much more valuable--and
profitable--by adding integrated bundles of telephone and
Internet services.
For another, it says something about US West's customers.
After all, we are the ones who give the company its worth.
Yet as we've been bid up, there appears to be nothing in
the deal for us. In other words, though we're the real targets
of Global Crossing and Qwest's offers, US West's shareholders
are the ones who will benefit from our newfound attractiveness.
There is, of course, something we can do to even out this
picture. We can give the state Public Utility Commission
regulatory authority over mergers between telecommunications
companies. In a few other US West states, this kind of oversight
already exists. Here in Oregon, the PUC has such power over
other types of utility mergers--between electric utilities,
for example. It used this power to great customer benefit
a few years ago when Enron acquired Portland General Electric.
It is currently attempting to achieve a similar result in
the proposed takeover of PacifiCorp by Scottish Power.
If the Republican leadership in the Legislature has any
concern for Oregon's telephone customers, both rural and
urban, it will not waste any time giving the PUC the right
of approval over any merger involving a telecommunications
company serving Oregon. With the legislative session moving
into its final phase, such a provision could easily be inserted
into Senate Bill 622, the compromise telecommunications
legislation soon to be considered by a House-Senate conference
committee.
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Willamette Week | originally
published June 16, 1999
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