CenturyLink gets extortionate pricing bonus from Level 3 deal

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Level 3 is engaging in “extortionate pricing” for the middle mile fiber connections it leases to broadband companies, and the problem will only get worse if CenturyLink is allowed to buy it. That’s the claim made by Windstream, a relatively small incumbent telephone company, based in Arkansas, that also offers data networking and other telecommunications services to businesses outside of its primary coverage area.

Windstream filed comments with the Federal Communications Commission, as it decides whether CenturyLink’s proposed purchase of Level 3 will go forward. As did Frontier Communications, which got a big amen from Windstream…

Like Frontier, Windstream is concerned that the combined entity will use its augmented scale and market power to engage increasingly in these and other practices that are contrary to the public interest and fair and reasonable competition, and are detrimental to Windstream’s continued effort to invest in its network to provide robust and affordable broadband service, particularly in rural and high-cost areas. As Frontier notes, “[a]bsent conditions aimed at remedying these practices, the Commission should conclude that the proposed transaction will substantially frustrate or impair the Commission’s implementation or enforcement of [federal telecoms law], which requires carriers to engage in just and reasonable practices.

There’s not much the FCC can do about Level 3’s current pricing policies, even it it wanted to do so. Former chairman Tom Wheeler folded his hand on regulation of middle mile services shortly after Donald Trump won the presidency, and it’s a safe bet that the FCC as currently comprised won’t take it up again. The real question is whether the FCC will allow CenturyLink to buy Level 3, significantly reduce what little competition exists in the middle mile fiber market and kick its predatory pricing practices into overdrive.

Meanwhile, here in California, there’s no word on whether the California Public Utilities Commission will weigh in on the deal. No formal proceeding has been opened, which indicates that CenturyLink and Level 3 hope to slide their hook up through on a simple, administrative basis. Given the CPUC’s clear declaration that middle mile competition matters, allowing such a lawyerly slight of hand would be a travesty.