Cox settles with Qwest for $2.2 mil, awaiting state regulator approval

Cox Arizona Telcom, LLC and Qwest Communications have already settled their dispute over the use of wiring in apartments, condominiums and town homes throughout the state. But while seeking final approval in Friday's hearing in front of the Arizona Corporation Commission, the two companies were forced to acknowledge the financial portion of the settlement in order to continue with the proceedings.

And the fight will continue as the ACC is still not prepared to approve the agreement.

Administrative Law Judge Dwight Nodes revealed that Cox has agreed to pay Qwest $2.2 million within 10 days of ACC approval of the settlement reached in early April. Cox has not admitted guilt in the case while Qwest will not seek punitive damages for claims that Cox technicians illegally spliced into Qwest-owned wiring in multiple tenant environments when deploying phone service to new Cox customers.

Nodes, sitting between Arizona commissioners Kris Mayes and Bill Mundell, ordered the financial settlement be made public during the hearing at the behest of the two commissioners. The payment amount is not closed, however, as both Mayes and Mundell questioned whether it will be enough to meet Qwest's financial burdens borne out of fixing past, present and future damages at the hands of Cox technicians. Mayes took accept ion with Qwest for seemingly putting its own business ahead of its customers.

"It seems as though all of a sudden your claims of public health and safety have evaporated and that you just want this done," she said to Qwest attorney Thomas Snyder.

Both Cox and Qwest officials said they want the ACC to approve the settlement as soon as possible. In the terms of the agreement, the $2.2 million is considered "back payment" for Cox using existing Qwest wiring in apartments but not paying for their use, said Rachel Torrence, Qwest Public Policy Group Director. According to an interconnection agreement between the two sides, Cox must notify and pay for using internal wiring that was installed previously by Qwest.

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.

The wording of the newly-reached settlement, and previous testimony by Torrence, do not address improvements in these areas by Cox. Because of this, the publicly-regulated Qwest customers may not be protected from future safety and financial problems relating to the issue, Mayes said.

Cox has already paid more than $1.4 million in repair and education costs, according to previous testimony. The company has admitted to making more than 9,000 "corrective actions" at MTE complexes throughout the state. Along with the settled amount, Cox will have paid $3.6 million to correct the problems.

When asked about the issue in 2007, Cox officials claimed there were less than a dozen problems.

Things seemed to be running smoothly for the first time in the 2-year battle between the state's largest and second largest telephone service providers until mid-April, when ACC utilities division analyst Armando Fimbres called for additional fines to be placed on Cox for its "willful and deliberate" actions.

Like Mayes and Mundell, he found the settlement lacking in the areas of addressing public safety and health, namely the loss of service in a potential hazardous situation. Fimbres said Cox has not met its burden for fixing these problems through the settlement, not has it met its non-compliance with ACC orders.

Douglas Garrett, Cox Communications Inc. Western region regulatory affairs vice president, rebutted Fimbres' testimony last week.

A brewing battle between ACC legal division representative Maureen Scott and Cox attorney David Rosenbaum provided somewhat of a sideshow during the course of Friday's hearing. Rosenbaum, a trial attorney who has little history appearing in an ACC hearing, raised dozens of objections to testimony from Qwest and ACC witnesses. Scott and Rosenbaum took exception to each other's comments about the evidence provided in court.

Rosenbaum said his client is not prepared to defend itself against Fimbres' calls for fines, calling the issue an affront to Cox's due process. Nodes said he would give Cox additional time to field a defense case against further penalties levied by the ACC.