Regulators put off decision on Qwest deal

The Minnesota Public Utilities Commission postponed its decision on whether to support the acquisition of Qwest by Louisiana-based telephone company CenturyLink, amid concerns about whether the $10.6 billion merger is in the best interest of the public.

The commission voted 3-2 on Thursday to return to the matter next month. Observers had been expecting approval of the acquisition and were surprised by the delay. But most believe the PUC eventually will approve the deal because there has been only limited opposition to it.

Still, the lack of significant opposition doesn't mean there aren't valid concerns, commissioners said.

"Running Qwest is a unique experience, and it is beyond anything CenturyLink has faced to date," Commissioner J. Dennis O'Brien said in proposing to delay the decision. "There was no evidence that the acquisition agreement meets the public interest."

The motion to delay followed a lengthy dispute at the hearing between Qwest and its competitors over whether the terms of the agreement adequately protected the interests of competitors.

O'Brien said he would support the acquisition if the agreement included more safeguards for Qwest competitors and if the new commissioner of the Department of Commerce, Mike Rothman, supported the deal. The former commerce commissioner approved the deal for reasons that weren't entirely clear, O'Brien said.

In a joint statement, Qwest and CenturyLink said that, while they were disappointed by the delay, "we remain confident that the record shows this transaction is in the public interest and that the commission will approve the merger in early March."

Under Minnesota law, the PUC must determine "whether the post-merger company would have the financial, technical and managerial resources" that would enable it to "continue providing reliable, quality telecommunications services in Minnesota," a PUC staff memo said. In addition, the PUC must determine "what impact the transaction would have on Minnesota customers and on competition in the local telecommunications field."

Smaller competing phone companies around the state have been fighting the merger on the grounds that their access to Qwest's network might be more limited unless there are more guarantees from CenturyLink. Without unfettered access, business or rural customers might not be able to get some services. Some of the larger competitors have reached agreements with Qwest, but many others are depending on the acquisition agreement to protect their interests.

Dan Lipschultz, an attorney representing a group of competitors, urged the PUC on Thursday to clarify wording in the acquisition agreement to guarantee that Qwest's quality of service would not be allowed to deteriorate under CenturyLink.

During the monthlong delay, Qwest and its competitors are expected to resolve their differences over the agreement's wording, said comissioner Phyllis Reha.