Qwest Tells Calif. Regulators SBC-AT&T Merger Could Hurt Consumers

"It is difficult to see how these two transactions could ever be found to be in the public interest," said Qwest, which has been spurned in its multiple efforts to buy MCI. SBC spokesman Dave Pacholczyk said Qwest "seems to be of two minds. They want to merge with MCI, but they don't want us to merge with AT&T. We're mystified by the contradiction," he said. MCI's board has voiced concern about Qwest's financial health -- it has $17 billion in debt -- and the long-term value of the shares Qwest would use as partial payment to MCI shareholders. In the filing, Qwest asked California regulators to examine the plans of SBC and Verizon for competing in each other's territories if the deals are finalized. It noted that other states likely will commence similar investigations. "Regulators will have to examine this level of concentration and evaluate its potential to harm consumers through higher prices, reduced service quality and less innovation," Qwest wrote.