Brief by Central Staff
Communications – August 1999 – Colorado Central Magazine
Life may be better here, but the profits are better elsewhere
Those “Life’s Better Here” ads on TV generally offer rural scenery to promote US West’s telephone service, but except when it’s shooting commercials, the local telephone monopoly prefers profitable population density to unprofitable scenery. It put 18 Colorado exchanges — among them Salida, Alamosa, Leadville, Buena Vista, Monte Vista, Crested Butte, Del Norte, Fairplay, Gunnison, and South Fork — up for sale last year.
On June 16, US West announced it had come to terms with a buyer: Citizens Utilities, based in Stamford, Connecticut. Citizens will pay $1.65 billion for 530,000 access lines (about $3,113 per line) in nine Western states.
Citizens (CZN to stockbrokers) has two divisions:
— Citizens Communications, which serves 1 million telephone customers in 13 states, among them Arizona, Idaho, Nevada, and New Mexico.
— Citizens Public Services, a general utility that offers everything from natural gas and electricity to water and sewage treatment, with 871,000 customers in 10 states, among them Colorado. The company plans to sell some of these operations to pay for buying more phone lines.
Citizens also owns 83% of Electric Lightwave, a high-speed data communication service provider.
The transfer from US West to Citizens will take at least a year to move through the federal and state regulators, which means that US West will make no improvements during that time — not that it likely would have, anyway.
US West prefers to invest where it has competition — in the cities — not out here in the boonies where it is essentially a monopoly. Further, US West is too big to tap into a federal subsidy program for rural service (the Universal Service Fund), while Citizens has a size and service profile that qualifies it for such subsidies. Citizens says it specializes in “telecommunications businesses in small- and medium-size cities and towns that are experiencing above-average economic and population growth.”
Thus it is at least possible to believe the Citizens’ promise that it can offer better service than US West has; by most accounts, service improved in Westcliffe and Saguache after US West sold those exchanges a few years ago to PTI, another company that specializes in ex-urban service.
There are some interesting connections in this deal between Citizens and US West. Recall that Citizens owns 83% of Electric Lightwave. Last year that company signed a long-term contract with Qwest Communications — which is trying to take over US West.
Qwest’s largest stockholder is Denver billionaire Phil Anschutz, the same fellow who arranged for the demise of the D&RGW Railroad and the abandonment of the Tennessee Pass line. No matter what deal Qwest cuts with US West, it’s safe to predict that Anschutz will find some way to provide mediocre service until he can sell out to some bigger outfit, at a substantial profit to himself.
From that perspective, the sooner that US West is out of our lives — especially if Anschutz ends up controlling the company — the truer it will be that “Life’s Better Here.”