CenturyLink takeover of Level 3 challenged in California

by Steve Blum • , , , ,

The proposed purchase of Level 3 by CenturyLink faces two formal protests in California. One comes from a coalition of consumer advocacy groups – TURN, the Greenlining Institute and the California Public Utilities Commission’s office of ratepayer advocates – and the other from the California Emerging Technology Fund. Both generally focus on the impact that rolling together two of California’s four major fiber companies would have on broadband availability, on both a wholesale and retail basis.

The coalition – which refers to itself as the joint consumer groups – is asking the CPUC to take a hard look at the merger…

The Commission should review the Proposed Transaction and consider its effects on safety, reliability, network infrastructure, investment, and competition. This transaction will have a direct and significant impact on the availability of backhaul and other wholesale services that are critically important to ensuring a robust marketplace for broadband services as well as many other offerings that ultimately impact all California consumers.

Several possible ways of mitigating some of the damage are suggested, including “California-specific commitments” from CenturyLink regarding network infrastructure investment, service quality and price, and employment and diversity programs. But, they say, the big problem – the deal’s effect on telecoms competition in California – needs a harder look…

By eliminating Level 3 as a potential competitor in the market for wholesale and enterprise services, the Commission may indirectly increase rates for wholesale services and place additional barriers on competitors that remain in the marketplace. [CenturyLink and Level 3] make no attempt to address how this merger will impact the long-term business plans and practices of Level 3 and CenturyLink in its competition with incumbent carriers like AT&T and Frontier. The Commission should require further assurances that Level 3 will remain an independent competitive carrier throughout California and will continue to advocate for reasonable and fair access to wholesale inputs offered by incumbent carriers.

It’s early days in the process. The two protests won’t be settled immediately – that’s likely months in the future. Instead, the next step is for the CPUC to determine what the process will be going forward, in particular what sort of information it will require CenturyLink and Level 3 to provide, both to it and the challengers.