MCI Agrees to Lease Access From Qwest

Long-distance carrier MCI Inc. on Monday struck a deal to lease access to Qwest Communications International Inc.’s local telephone network, the first major agreement since a federal appeals court threw out government access rules.

The deal followed four days of closed-door talks that federal regulators had called to encourage the four big local telephone carriers and their two biggest rivals, MCI and AT&T; Corp., to reach commercial agreements for access instead of pursuing further litigation.

Qwest and MCI have been working on an agreement for weeks. MCI will see no price increases this year, with gradual increases through early 2007.

“This agreement proves that a negotiated outcome is not only possible but mutually beneficial,” said MCI Chief Executive Michael Capellas.

No other pacts were reached during the four days of negotiations overseen by Federal Communications Commission Chairman Michael K. Powell and Commissioner Kevin J. Martin, sources close to the talks said.

FCC representatives did not return calls seeking comment.

The U.S. Court of Appeals for the District of Columbia in March threw out FCC rules that had required the big local carriers, known as the Baby Bells, to continue leasing access to rivals at government-set rates in an effort to promote competition.

With those rules due to be wiped off the books June 15, that put pressure on the two sides to reach private commercial agreements or face the uncertainty of prolonged litigation with an appeal to the U.S. Supreme Court.

The Bells have sought to eliminate the rules, arguing that the prices were set below their costs. Their rivals have said those rates were necessary for fair competition.

SBC Communications Inc., California’s dominant local phone company and one of the loudest critics of regulated lease rates, has struck deals with small telecommunications companies in the last few months.