Dark fiber will disappear if CenturyLink buys Level 3

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CenturyLink’s proposed acquisition of Level 3 continues to rumble through the review process at the Federal Communications Commission. Very little organised opposition has surfaced. Some market-based opposition has come from Incompas, a lobbying group that represents competitive carriers and similar network and system operators. They’re challenging the merger because, among things, it would roll the major independent fiber company in the U.S. – Level 3 – into an incumbent telco – CenturyLink – with a traditional monopoly mindset…

As it stands, the applicants have not provided evidence—or even a statement—of an intent to build vigorously outside CenturyLink’s [incumbent local exchange carrier] region. The loss of a nationwide competitive builder creates a significant harm to customers who otherwise would have an alternative fiber provider to the incumbent monopolist. Instead, the applicants merely cite to benefits the transaction will bring to the merged entity, not to the public.

One of Incompas’s objections is that the merger would damage, if not outright kill, the market for dark fiber leases. CenturyLink’s and Level 3’s response amounts to dark fiber? What’s dark fiber?

There is no basis for treating wholesale dark fiber as a separate product market. In analyzing the relevant product market for transmission services, the Commission assesses the extent to which competitors have deployed network facilities. It does not assess the extent to which competitors offer particular services that can be provided via those network facilities. This makes sense because, among other reasons, fiber network facilities can be used to provide a wide variety of lit services as well as dark fiber.

Translation: we’re happy to sell metered service by the megabit but if you want dark fiber, bury it yourself.

The California Public Utilities Commission also has to sign off on the CenturyLink-Level 3 deal, but so far there’s no indication that it will get a diligent, formal review – it’s possible it could slide through administratively. Given the attention the commission has paid to the lack of competition in California’s middle mile services market, that would be irresponsible.