Centurylink deal still contested in California, still an insider game

by Steve Blum • , , , ,

CenturyLink’s purchase of Level 3 Communications faces opposition in California, despite a squishy settlement reached with three of the four organisations that objected to the deal. The fourth organisation – the California Emerging Technology Fund (CEFT) – registered its formal rejection of the settlement in comments filed with the California Public Utilities Commission on Friday.

Because Level 3 is certified as a telephone company, the CPUC has to determine if the transfer is in the public interest – whether or not anyone protests. But pretty much anyone is allowed to jump in too – intervene in CPUC jargon – and if certain requirements are met, they can claim intervenor’s compensation for their troubles, whether or not anything genuinely useful comes of it.

CenturyLink and the three groups who settled – TURN, the Greenlining Institute and the CPUC’s office of ratepayer advocates – are pushing the CPUC to short circuit the full review process and accept the agreement they reached between themselves as a substitute. The pressure is on because CenturyLink and Level 3 have a self-imposed deadline of 30 September 2017 to close the transaction. If the review follows typical CPUC timelines a decision might not come until sometime next year, which is a result CenturyLink is anxious to avoid.

Absent its own settlement, CETF is pushing for a full review, and in the process turning up the pressure on CenturyLink. It would be unusual for the CPUC to forgo an independent inquiry if effective opposition remains. In its filing on Friday, CETF correctly points out that the settlement agreed by the other three objectors has nothing of real value it it – all CenturyLink is obliged to do is aspire to invest $323 million in its operations in California. It takes the position that the deal poses grave dangers to Californian broadband but, still, nothing that a few hundred million dollars won’t fix, if its spent with proper supervision.

Wrong.

Whether CenturyLink spends its money its own way or spreads some of it around in the ways suggested by CETF, the result will still be the end of what open competition remains on many of California’s key fiber routes. The best way to fix a problem is to not cause it in the first place. The CPUC needs to make its own decision based on a complete and disinterested review. It should not subcontract the job out to organisations with more narrow interests, however well intentioned they might be.