Qwest Loses Telecom-Fee Case in Ore.

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A federal judge in Oregon has upheld the right of cities in the state to
collect a 7 percent rights-of-way fee from local phone-service provider Qwest
Communications International Inc.

Qwest claimed that the fee and other requirements, which applied to its
exchange-access revenue, violated the Telecommunications Act of 1996 for having
the effect of prohibiting local phone competition.

U.S. Magistrate Judge John Jelderks held that because the fee was enacted by
the state legislature in 1989 and because Qwest had been providing local phone
service for many years, the fee could not be viewed as a prohibition on Qwest's
ability to compete.'Qwest has not pointed to a single telecommunications service
that it, or any other entity, is effectively prohibited from providing because
of the cities' revenue-based fees or any of the other challenged requirements,'
Jelderks said in a 17-page opinion.

Qwest withheld payment while the litigation was pending. Jelderks said
Qwest's action violated its franchise agreements with the cities it had
sued.

Qwest also claimed that the fee was illegal because it was based on revenue
rather than rights-of-way maintenance costs. Jelderks said the 1996 law did not
address whether revenue-based fees were impermissible.

Qwest, based in Denver, is a $19 billion company that provides local phone
service in 14 Western states and serves more than 30 million customers in the
United States and abroad.

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