ACC analyst decries Qwest, Cox settlement

An analyst testifying to the Arizona Corporation Commission has recommended both Qwest Corp. and Cox Arizona Telcom publicly disclose the settlement amount between the two parties after Qwest officials claimed Cox technicians had continuously violated an agreement to use wiring at private residences throughout the state.

In testimony given to the ACC on April 7, 2008, ACC utilities division analyst Armando Fimbres called for further compensatory actions by Cox beyond the scope of the private settlement because, "it does not hold Cox accountable for ongoing violations of its (Interconnection Agreement) with Qwest and Commission orders. Staff also does not believe that the Complaint Settlement Agreement goes far enough given the egregious nature of Cox’s behavior in this case."

Fimbres said Cox's actions were "willful and deliberate." While Fimbres and others at the ACC know the agreed settlement amount, it has been redacted from documents obtained by Az Tech News.

Neither side would publicly disclose the amount, but sources close to the ACC said the amount was in the "multiples of millions". Given the potential effect on Cox subsciber rates and other issues of public concern, Fimbres told the ACC, "The Parties should disclose the confidential lump-sum settlement amount," according to testimony obtained by Az Tech News.

In 2006, Qwest accused Cox of tapping into existing wiring owned by Qwest at more than 5,000 telephone terminals at multiple tenant environments like apartments and townhouses in order to deploy their telephone service. According to a 1997 interconnection agreement, Cox agreed to notify Qwest when it was using existing wiring and pay for use of these wires.

In documents obtained from the ACC, Cox officials admitted to breaking the agreement and not notifying Qwest officials of their technicians' actions. Both sides agreed to settle the case in February 2008, ending nearly two-years of fighting in and out of the Commission hearing rooms.

Fimbres testified that Cox should be required to report its actions beyond the scope of the agreement in order to, "deter such conduct in the future."

Another round of testimony is due by April 18, 2008, giving Qwest and Cox a chance to rebut Fimbres' testimony. A hearing is scheduled for April 25, 2008 and will be presided over by Administrative Law Judge Dwight Nodes. In previous documents obtained by Az Tech News, Nodes has asked each side to disclose the settlement amount.

When reached for comment Monday, Cox officials issued the following statement:

"We think that the settlement promotes continuing, vigorous competition for telephone services for Arizona's many residents of apartments and condominiums, and it satisfies the interests of the party's involved. We hope that the Commission approves the settlement without modification following next Friday's hearing"

The ACC had previously asked the two sides to agree on a price, but has stepped earlier this year in to oversee the agreement.

Some high-level Qwest and Cox employees have complained that the ACC's about-face has added another layer of bureaucracy to the private settlement agreement. Those employees declined to give their names because they are not authorized to speak to the media.

In his testimony, Fimbres said Cox officials did not address the issues of public safety and record keeping in their settlement agreement with Qwest. Qwest, one of the three largest telecommunications providers in the country, claimed in 2006 that the actions of Cox technicians caused financial harm, physical damage to its network, affected customer service, and "jeopardized the public health and safety," according to the initial complaint.

According to testimony from Qwest, Cox has agreed to and already undertaken steps to train technicians on the proper way to install and record use of existing telephone wires owned by Qwest.

Cox officials have also claimed to have made more than 9,000 corrective actions and incurred more than $1.4 million in inspection and repair costs despite not acknowledging culpability to the issues, according to Fimbres' testimony. Because Cox officials have not admitted to any wrong-doing, "Cox’s continued protestation of its innocence rings hollow in light of the record evidence," according to his testimony.

Fimbres also told the ACC that Cox has not addressed training of technicians who caused the issue in the first place.

Fimbres called the settlement agreement between the two parties "backward-looking," but "does not address the terms and conditions for future use of Qwest (multiple tenant environment) terminals by Cox." Fimbres also testified that Cox has not complied with ACC orders, a common theme that he used to decry the settlement.

"Cox continues to deny responsibility for its workmanship and non-payment of the
Commission authorized rates," he told the ACC.