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Qwest makes $695,000 call By JESSICA SMITH Qwest Communications International stopped payment Friday on fees charged by Medford for use of public rights of way. Citing an April decision by the Ninth U.S. Circuit Court of Appeals, the local phone service provider said it will withhold payment of city-imposed fees that are based on revenue from phone lines in Medford and other Oregon cities. "We stopped making the payments because the court affirmed our position that fees must be related to managing the rights of way," said Mary Healy, a Qwest spokeswoman in Portland. A city official said Qwest's move is "cause for grave concern." Medford charges Qwest 7 percent of the company's gross revenues in the city - the maximum allowed under state law - for use of public rights of way. In a year, the city collects about $695,000 under a "franchise" agreement with Qwest. The current agreement expired June 30 and Qwest announced Friday that it would not make the roughly $150,000 quarterly payment due in Medford. Though Qwest will no longer pay city-imposed fees, the company will continue to cover costs related to phone line installation and repairs in public rights of way, Healy said. It's too soon to tell what effect Qwest's decision will have on Medford, but leaders say it could mean trouble for the city's pocketbook. "It's a big hit to our budget," said Councilman Jim Key. "That's money we had counted on that we're not going to get." According to Jef Faw, deputy city manager, Qwest's refusal to pay city-imposed fees may eventually force Medford leaders to look for ways to make up for the lost revenue. For now, though, the city awaits the outcome of a court battle in Portland. Earlier this month, Qwest and Portland city officials agreed to let a court decide whether the city may impose fees for use of public rights of way. A decision is expected in August. Meanwhile, Qwest will continue to include surcharges on subscribers' bills to cover city-imposed fees, Healy said. Should the court side with Portland, Qwest will use the surcharges to pay city fees, Healy said. If the court agrees with Qwest, those funds would be refunded to subscribers. Immediate financial implications aside, Faw said Qwest may be setting the stage for a revolt by area utilities that pay city-imposed fees. So-called franchise fees are the second largest source of revenue for Medford's general fund, behind property taxes. In the 2001-03 budget period, the city expects to collect about $4.3 million in fees charged to utilities such as Qwest, Charter Communications and Sprint. Qwest's action "is a challenge to the city's ability to seek fair compensation for use of the public rights of way," Faw said. "It's cause for grave concern." Reach reporter Jessica Smith at 776-4481, or e-mail [email protected] Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.