Qwest, CenturyLink Merge, Create Even Bigger Marginally-Relevant USF Money Pit

from the bigger-does-not-mean-better dept

Thu, Apr 22nd 2010 6:14pm — Karl Bode

Qwest was founded in 1996 by Philip Anschutz, who at the time owned the Southern Pacific Railroad and used the opportunity to deploy fiber lines along railroad tracks. It seems like only yesterday that Qwest paid $45 billion to acquire US West in 2000, one of seven baby bells created by the antitrust breakup of AT&T in 1983. Since then, Qwest has stumbled through accounting scandals and watched its stock plummet as the carrier struggled with traditional voice defections without a wireless division to buoy revenues. Meanwhile, it almost was yesterday that CenturyTel merged with Embarq to create "CenturyLink." This morning Qwest and CenturyLink announced they in turn would be merging in a deal worth $22.4 billion (including $11.8 billion in Qwest debt).

At first glimpse it's not entirely clear what the point of the merger is, unless the two companies were simply interested in losing landline and last-generation DSL customers to cable competitors even faster. Neither company has exactly been lighting it up on the network upgrade front -- and Qwest has spent most of the last few years trying to trim debt for an acquisition instead of investing back into the network. The result is a company with aging last-mile infrastructure who (in the markets where it actually sees competition) pits slower DSL against faster alternatives like cable DOCSIS 3.0 technology or community fiber (which they have spent millions suing and fighting in Utah and Washington State).

Creating a larger company doesn't magically spawn a wireless division, and the company is still going to need substantially more cash to upgrade all of that outdated copper if they want to stay relevant. They may be thinking that by merging they can create a "too big to fail" super-rural telco with a better shot of getting USF and stimulus funds. As we've long noted, the USF is a very, very broken program that funnels money to carriers with historically little to no oversight into how that money is spent (and $25 billion has been dumped into e-Rate alone since 1998). Qwest recently applied for $350 million in federal stimulus funds, and lobbyists have been pushing the FCC to expand the USF to cover residential broadband and give more of that money to bigger carriers.

So the result will be a new, massive phone company primarily serving uncompetitive, rural markets using outdated last mile connections, with consumers helped through this transition via a support infrastructure that just grew incredibly fast. All of this will be propped up by the historically-broken (but soon to be supposedly "reformed") USF system and taxpayer subsidy, guided by Qwest lobbyists and an FCC with no real interest in improving competition in the sector. Surely this will turn out well for everybody involved, right?

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Filed Under: usf
Companies: embarq, qwest

20 Comments

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davebarnes (profile), 22 Apr 2010 @ 6:26pm

Well, as a Qworst customer in central Denver
I can say that this "merger" does not excite me one little bit.
My 1970 (or earlier) phone lines will stay the same and I will still not be able to order more than 3Mbps (down) from CenturyLink.
And, for many charities in Denver, they are screwed with HQ moving to Monroe, LA.
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Electric Baconisto, 22 Apr 2010 @ 6:48pm

Eclectic.... decisions...?
I had a much longer rant, however, I will just stick with, "That is totally borked!"
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Anonymous Coward, 22 Apr 2010 @ 6:54pm

karl, got an ax to grind?
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Anonymous Coward, 22 Apr 2010 @ 7:31pm

Qwest shuts off broadband of accused users, without caring whether the users are guilty or innocent. Does anyone know whether or not cunturylink does?
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Greevar (profile), 22 Apr 2010 @ 7:59pm

Complacency at it's best.
This is just more anti-competitive bullshit. Why provide your customers with superior service when you can just buy out anyone that could do it better? Qwest is a guy living in an air-conditioned house selling ice cubes to people outside in 100 degree weather. If his neighbor gets AC and an ice maker as well, he can just offer him a large lump of cash to work for him instead. That way, his neighbor won't be selling the same ice cubes for cheaper or even letting people rent some space in an AC cooled room in his house.
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Anonymous Coward, 22 Apr 2010 @ 8:39pm

Karl,

Get some facts straight..,
Qwest has the largest internet fiber backbone in the United States, and the 2nd largest internet backbone in the World. Provides fiber connections to 95% of all the Fortune 500 companies. And is one of only 3 backbone service providers for the U.S. Government. It's not the small fry company you make it out to be.
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Anonymous Coward, 22 Apr 2010 @ 8:42pm

Re:
Ah TAM, always debating the issue, not the poster.

Oh, I mean, Ah TAM, 24/7 hypocrite.
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Anonymous Coward, 22 Apr 2010 @ 9:00pm

Re:
I think he was talking about the residential side of things. Wholesale bandwidth over the backbone or point to points are rarely if ever brought up on this site. TD seems to always be more worried about how something affects an end consumer.
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trollificus (profile), 22 Apr 2010 @ 9:10pm

Oh, it's worse than that...
Qwest is an almost perfect exemplar of corporate villany, short-sightedness, customer abuse and generally evile behavior.

I don't have a lot of links, as this is all from personal experience, but they violated Utah law regarding DSL service, specifically engaging in false service outages directed at a medium-size ISP/internet wholesaler I worked for. They further endeared themselves to me by unilaterally switching me from my FREE, work-provided DSL service (maintained and supported by friends and co-workers) to their overpriced shite service.

When my phone bill arrived, with congratulations on my new service, I called, screamed at some poor support guy, made damn clear that I did not want their service, had never ordered their service and, given the circumstances, would have no conceivable reason to order their service.

Month later, came back from a weekend in the mountains to find the service had been switched. Called, screamed, act2, spoke to a supervisor who was so beat down she didn't even offer terms, just accepted my cancellation of land line, DSL, everything related to Qwest. As if it happened a lot.

Oh, and when she checked the notes on my first cancellation call, she claimed all they said was "Explained new service to caller." Nice. That's not ineptitude of support, that's instructing your support personnel to participate in a fucking policy of fraud. No wonder he sounded a little weird.

There's a lot more, SLAMming, SLAPPing, dirty lobbying, pretty much the whole role call of bad corporate practice.

Good luck, anybody involved in any way with these fucks.
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Anonymous Coward, 22 Apr 2010 @ 10:58pm

All the rats jumping into the same life boat.
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Blatant Coward (profile), 23 Apr 2010 @ 12:40am

Re: Re:
Of course, with a business customer, support, pricing, speed, passthrough are all mandated with limits set in the individual company contract. This makes it hard to pull shenanigans on them, especially if the company using the service can afford a half decent IT department.

With residential service the "contract" is mainly "you pay us what we want, don't do what we dislike, and we'll try to get you service. When we feel like it. Unless we don't. We reserve the right to change this any way we want at any time." Since usually individual residents are either too poor for lawyers, don't have a set metric to complain about, are not able to act as a group, or have a range of choices about their broadband services, all they can do is take it and hope. So yah these changes would be more interesting.
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FarmerBob (profile), 23 Apr 2010 @ 2:35am

But a month after Anschutz bought USWest . . .
. . . he sold his railroad holdings and lost the right of way to lay the fiber lines that were the deciding factor of him getting the deal passed. We NEVER got fiber. And no fines nor nothing said. Now once again things have been promised and like before will probably not be honored. I live 3318 ft from the Central Office and can not get a clean fast DSL line with Qwest to save my life. Before that I had a 10Mbps SDSL with 4 VoIP phone lines, before they were called that for $150 a month with SprintION on the same copper, which went away when Qwest would not grant Sprint their legal right-of-way. Sprint said it was cheaper to go out of business than to fight. I had that service for four years with no, none, zero issues the whole time. Qwest has to be one of the worst providers ever. Who knows this merger might fix all their wrongs. But I won't hold my breath. I may pray though.
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Dementia (profile), 23 Apr 2010 @ 3:24am

Re: Well, as a Qworst customer in central Denver
Be happy with 3MB, I can't even get a plan rated higher than 512k and, if I'm lucky, I can actually get 256k speeds.
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The Anonymous Hero, 23 Apr 2010 @ 4:56am

Re: Re:
Well, it does sound a bit like grinding an ax against CenturyLink and Qwest.
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John Fenderson (profile), 23 Apr 2010 @ 7:02am

Re:
On the other hand, Qwest was the only telecom who didn't fork over their customer data when the government illegally requested it of them after 9/11. So... some good, some bad.
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Karl Bode (profile), 23 Apr 2010 @ 8:50am

Re:
CenturyLink does not do this as far as I know.
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Karl Bode (profile), 23 Apr 2010 @ 8:52am

Re:
Sure...they still have their long-haul network, they have small business customers, and they feed fiber to towers -- so there's money to be made there.

That really doesn't change the wireless or residential equation, or my other points about the merger being about creating a company that's too big to fail and propped up with taxpayer funds.
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Derek Kerton (profile), 23 Apr 2010 @ 3:21pm

Re: Complacency at it's best.
"This is just more anti-competitive bullshit"

Not really. The two companies serve entirely different regions.

It is really just about consolidation of operations in a bid to achieve some cost-cutting. Aside from the state of the two companies, and their future prospects as stated by Karl, the question should be, is it a good deal, or not?
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anonymous Qwest employee, 28 Apr 2010 @ 2:10pm

Be fair
Qwest does not instruct their employees to leave short or inadequate notes. Qwest also does not instruct its employees to do anything of a shady or illegal in nature. People who scream at customer service representatives that have no involvement in their problem are the problem. If you ask for things in a polite voice, you get polite service. No everyone has nerves of steel, yelling at people can really mess with them.
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marcus, 8 Dec 2010 @ 7:44pm

Re: Complacency at it's best.
Centurylink is buying out QWEST... but that's just a fact, who cares aout that. The biggeest reason for the merger is that Centurylink has virtually no "Business" class services, and QWEST owes most of its sucess to its Business divisions.
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