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Qwest competitors ringing up business

PSC says utility's market share has dropped to 74%

Qwest Communications International Inc.'s hold on the state's telecommunications industry is being chipped away by competitors, according to a new report.

The Utah Public Service Commission's seventh annual report on the status of the telecom industry in the state shows that Qwest controlled 84 percent of the market in 2001 where it faced competition, but that number had dwindled to 74 percent this year.

Qwest's share of the residential market fell from 94 percent to 85 percent during that time, while its share of the business market slipped from 68 percent to 53 percent.

Qwest competitors served nearly 102,000 access lines in 2001, but that had grown to 289,560 in 2004. The residential figure grew from about 6,000 to 100,974 during that same period, while their business lines grew from 95,805 to 188,586.

Qwest's largest competitors in Utah are Comcast Phone of Utah, XO Utah and McLeodUSA, based on the number of lines served. Based on revenues, the largest local exchange companies are Qwest, AT&T Communications of the Mountain States, XO Utah and Comcast Phone of Utah.

The commission said the most common indicators of competition are market share and the number of competitors. The latter changed little during the previous year. Of 85 licensed local-exchange competitors, only 34 are providing service.

"Competition continues to develop in most of Qwest's service territory in Utah, although some areas have more competition than others, such as the business markets in urban areas," the commission's report said.

Also, while nearly all of Qwest's 60 exchange areas in Utah have at least one competitor operating in each serving area, "the companies may not be serving the entire exchange and may only offer service to a portion of that service area," it said.

The commission also noted that alternatives to to the traditional land-line phone service have emerged, including the ability to make a telephone call over power lines, wireless transmission and Voiceover Internet Protocol (which allows calling on a computer via the Internet).

Wireless service, the dropping of second or third lines or customers switching to VoIP services may have caused the total number of access lines served by Qwest and its competitors to fall about 1 percent from 2003 to 2004, the report said.

"Considering the population of Utah grew and that the economy continued to recover during the past year, a drop in the total number of lines served is significant," the report stated.

The commission noted that tracking VoIP's impact is difficult, but Federal Communications Commission statistics show Utah had 1.15 million wireless subscribers last December, up 10 percent from the previous year.

"Based on the current regulatory uncertainty and hard-to-quantify substitution of alternative services, the future of competition in the basic local exchange markets is unknown," the Public Service Commission concluded. "The significant steady growth of access lines that began in the late 1980s and continued to increase through the 1990s and into the early 2000s appears to have reversed. Whether the number of access lines will increase or decrease in the near future is unclear."

While competitors may ultimately need to build facilities that duplicate those of Qwest, "it is likely that the current trend will continue with various services being offered in bundles, such as wireless, local and long distance, and broadband packages."