The chairman of the Minnesota Public Utilities Commission says he's less concerned after a hearing Thursday on the effect of Qwest Communications International's huge debt load on its Minnesota customers. Qwest is the largest provider of local phone service in Minnesota. Still, some state officials say they're concerned about Qwest's quality of service.

	Qwest Communications International is carrying a huge debt load. Company officials say that service to regional phone customers should not be affected by the parent company's financial problems.

The nearly three-hour hearing before the Public Utilities Commission focused on Qwest's $26 billion in debt - its effect on phone rates and service quality. Qwest officials says the regional phone company Qwest acquired as part of US West in 2000, has $300 million in debt due this year, has to refinance about $1.2 billion coming due next year, and has about $850 million in debt maturing the year after.

But they said even with declining revenues, the company is viable as a stand-alone entity. After the hearing, PUC Chairman Gregory Scott said he feels Minnesota ratepayers are insulated from the parent company's debt problem.

"Our local service provider, that we all know as US West and that they now call Qwest Corp., on its own is doing fine," Scott says. "On its own, it has a revenue stream that can service its debt....If it were standing alone, there would be no issue here."

Scott says part of the insulation also stems from a regulatory agreement that limits Qwest's ability to raise rates, and subjects some price hikes to commission review.

"There's an old adage that retail service is the first thing to go when financial problems hit a company. And we've seen evidence of that at (my office). Our phones are ringing." - Peter Marker, Regulated Utilities Division of the attorney general's office

But others at the hearing were less sanguine. Peter Marker with the Minnesota Attorney General's Regulated Utilities division says officals there are concerned about both rates and retail service.

"We certainly think that the health of the company has a direct effect on those two issues. There's an old adage that retail service is the first thing to go when financial problems hit a company. And we've seen evidence of that at RUD. Our phones are ringing," Marker says.

Qwest officials announced they're scaling back plans to cut technician jobs. The company says there's enough work to spare 65 jobs of 410 cuts originally planned. The company says the cuts reflect a declining workload, not financial condition. But Commissioner Marshall Johnson recalled a decline in service levels following layoffs four to five years ago.

"And down it went. We had nothing but problems, huge problems. And now you're back up. And I'm frightened to hear you're letting people off because I know, blank well, what's going to happen - and it's not good," said Johnson.

"We have dedicated resources here that we have had in place for a couple of years, that have really turned the ship around on customer service. " - Qwest spokesman Bryce Hallowell

Qwest customer Gary Lieske came to the meeting to complain about receiving notice that a former Qwest contractor might put a lien on his house of more than $400. Qwest hadn't paid for repair work done at Lieske's Maple Grove home. Now, I gotta (sic) tell you that's garbage. And somebody better figure that out," PUC Chairman Gregory Scott responded to the complaint.

Qwest officials promised to take care of the situation immediately, and say it arose from a dispute between the two firms that's now in court, not Qwest's inability to pay.

Qwest officials say their service quality has improved over the past two years, and the past six months are probably the best they've had. Spokesman Bryce Hallowell says service quality will contine to improve.

"We have dedicated resources here that we have had in place for a couple of years, that have really turned the ship around on customer service. What has been going on with the corporation - from a parent company perspective - really has very little impact on service impact here in Minnesota," Hallowell said.

Still, the PUC voted to have the state Commerce Department, which is already investigating the situation, report back to the board on its recommendations. Commerce department officials say its too early to indicate what the time frame for a report might be.

The PUC also wants to examine whether any proceeds from the sale of its Yellow Pages business, now known as QwestDex, should benefit Minnesota ratepayers.

Minnesota PUC