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March 3, 2005

House Approves Bill To Reduce Qwest's Earmark For Rural Phone Service Fund

By Barry Massey
The Associated Press
   SANTA FE   —   The House approved a proposal on Thursday to halve the amount that Qwest must earmark to a fund that pays some costs of extending telephone lines to new customers in rural areas.
    The measure also is an element in a proposed venture that could bring more telephone service to the Navajo Nation. The business deal involves a longtime associate of Gov. Bill Richardson.
    If enacted, the House-passed legislation will require Qwest to set aside $1 million a year for the "rural extension fund" rather than its current obligation of $2 million annually. However, the bill will end that requirement on Dec. 31, 2008 or before that date if utility regulators agree to stop the earmark.
    The House approved the bill on a 56-6 vote without almost no debate.
    One provision could provide some financing for a startup company that is negotiating to buy Qwest's telephone lines on the Navajo reservation. The company, Sacred Wind Communications, plans to use wireless technology to expand telephone service on Navajo lands.
    Walter "Butch" Maki, who runs a lobbying and consulting business, is an officer and investor in Sacred Wind. Maki worked for Richardson when the Democrat served in Congress and remains an ally of the governor.
    The legislation, as initially proposed, would have allowed Qwest to no longer set aside the $2 million a year that has gone into the fund since the late 1980s.
    Qwest sought the legislation after the state's utility regulator, the Public Regulation Commission, turned down the company's request to stop the pay-in requirement.
    The chairman and members of the PRC have testified against the legislation, saying regulators   —   not legislators   —   should decide whether to end the earmark and how ratepayers can benefit from the $2 million that otherwise would go into the fund.
    The rural extension fund currently has a balance of $15 million and Qwest contends it's no longer necessary to earmark more for that account.
    The legislation will permit an unspecified amount of money from the fund to be transferred to Sacred Wind if it acquires Qwest's telephone lines on Navajo lines.
    The fund pays up to $15,000 of the costs for extending telephone lines in rural areas where basic phone service is unavailable. Customers are responsible for paying line extension costs that exceed $15,000. Even if the legislation is enacted, Qwest must continue to follow that policy in providing service to rural customers who are more than a certain distance from the company's current lines.
    Qwest officials say the balance of the fund is more than enough to pay costs of running lines to about 700 customers currently waiting for service in rural areas. About 400 of those customers are on Navajo lands.
    John Badal, a former president of Qwest in New Mexico who is in line to run Sacred Wind, has said the startup company is seeking a portion of the rural extension fund in its negotiations with Quest because Sacred Wind will assume Qwest's financial responsible for extending service to the 400 potential customers.
    According to Badal, the legislation also will ensure that the PRC accepts any fund transfer negotiated between Quest and Sacred Wind.
    The House, before approving the bill, revised the proposal to shorten the time period   —   making it 2008 rather than 2010   —   that Qwest would be required to continue setting aside money into the fund unless the PRC and company agree to halt that sooner.
    The bill heads to the Senate, which approved a separate proposal that would eliminate Qwest's annual set-aside.
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    The Qwest rural extension fund measure is HB256.