Already facing a probe by the U.S. Securities and Exchange Commission (SEC) into whether it misleadingly inflated revenue in 2000 and 2001, telecommunications carrier Qwest Communications International is under suspicion of striking secret deals with competitors who agreed not to oppose Qwest's rapid expansion.
An example of such a deal would be where Qwest offered a smaller carrier discounts for using Qwest's infrastructure, on the understanding that the carrier would not oppose Qwest's submission to operate long-distance services in that market.
Qwest Monday responded to reports that the local and long distance carrier, based in Denver, is under investigation, assuring that the issue will not affect the company's filing schedule for entering long-distance markets.
The 1996 Telecommunications Act mandates that regional phone carriers in the U.S. such as Qwest provide nondiscriminatory access to their services, so that an agreement struck with one local provider should be freely available to all. Nondiscriminatory access is a requirement for entry into a state's long distance market.
"The agreements at issue are not about Qwest failing to allow competition," the company said in a release. "The issue is about whether 11 contracts between Qwest and individual wholesale customers should have been filed with state public utility commissions."
According to a Monday story in The Wall Street Journal, several U.S. states have been investigating these allegations for up to a year. Qwest, fearing a series of separate state hearings, has now asked the U.S. Federal Communications Commission (FCC) to intervene and rule on whether it violated any regulations.
The contracts did not need to be disclosed but Qwest asked the FCC for a ruling because the disclosure question had not been previously clarified, Qwest said.
The FCC has not yet decided whether to step in, the Journal said. The states conducting investigations include Minnesota, Arizona, Oregon, New Mexico, Colorado and Utah, according to the Journal.
The allegations against Qwest add to its legal burden. Earlier this month, the SEC began a formal investigation into accounting procedures at Qwest, covering how Qwest recognized revenue and accounted for sales of optical capacity, and matters relating to its sale of telecommunication equipment to customers who either purchased Internet services from Qwest or who received financing from the company.