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CenturyLink, the state’s dominant provider of landline phone service, will be mostly deregulated after a decision Thursday by the Minnesota Public Utilities Commission (PUC).

CenturyLink petitioned the PUC last summer to change its regulatory status, allowing it to be treated as a competitive market telecom provider. The phone company said it needed the change to fend off stiff competition from wireless carriers and cable TV providers.

The PUC voted unanimously in favor of CenturyLink’s petition for all but five of the 109 telephone exchanges in Minnesota served by the company. The measure gives the phone company more flexibility to raise rates in most of the state as of Jan. 1.

The five excluded exchanges are in the Iron Range towns of Biwabik and Cook; Glenville, which is near Albert Lea; Sabin, southeast of Moorhead; and Hanover on the western edge of the Twin Cities. There are about 2,000 customers in those exchanges, which will be under traditional rate-of-return regulation.

“We are pleased the commission has recognized the competitive landscape in 104 Minnesota exchanges,” Monroe, La.-based CenturyLink said in a statement. “Once the order is final, we will determine any next steps regarding the other five exchanges.”

Under deregulation, CenturyLink must continue to meet service quality requirements and notify customers about substantive changes to service terms, according to the PUC.

CenturyLink has not been under the same strict state scrutiny as an electric or gas utility, but it’s still heir to the regulated, regional Bell system. CenturyLink petitioned the PUC for a change after the Legislature in 2016 passed a law allowing local phone carriers to request reduced regulation.

To achieve that goal, CenturyLink had to show that it serves fewer than 50 percent of households in an exchange service area, and that at least 60 percent of those households can choose voice phone service from at least one competitor. CenturyLink argued that it met all necessary thresholds.

The Minnesota Department of Commerce, which advocates for the public interest, had argued that CenturyLink’s competitive analysis was flawed for a number of telephone exchanges, and therefore those exchanges should not be deregulated.

The Commerce Department said in a statement that it would continue working “to ensure that all Minnesotans have access to affordable, quality basic phone service, wherever they may live in the state. Many areas now have competitive choices for phone service. But some areas still do not.”

The Minnesota Attorney General’s Office, which advocates for consumers, opposed CenturyLink’s deregulation request. “We’re frankly terribly disappointed,” said Ben Wogsland, a spokesman for Attorney General Lori Swanson. Many people still rely on landlines, he said, “and there are many areas in greater Minnesota where cell coverage is very spotty.”

Under the competitive market regulation CenturyLink sought and won, the company may raise rates by increments of $2 per month to a cap of $25 per month until Dec. 31, 2022. However, any incremental increase must remain in effect for 12 months.

After Dec. 31, 2022, the $25 cap is removed and further increases of $2 per month are deemed approved unless the PUC takes specific action.

Mike Hughlett • 612-673-7003