FCC limits scope of merger reviews as it okays CenturyLink-Level 3 deal

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CenturyLink can close its deal to buy Level 3 Communication, and will probably do so tomorrow. The Federal Communications Commission gave the final green light to the deal on Sunday, without imposing any significant conditions. The FCC’s decision amounts to a manifesto that lays out how the republican majority will sharply restrict its review of future mergers and acquisitions.

The previous democratic-majority FCC took a broad look at proposed mergers, sometimes imposing conditions aimed at extracting general public benefits, but not necessarily directly related to problems caused by the transaction itself. One example was the low price Internet package AT&T was required to offer to low income households when it was allowed to buy DirecTv.

In a statement, FCC chair Ajit Pai said such conditions are a thing of the past…

This is in line with past pronouncements by the Commission that we will use conditions “only to remedy harms that arise from the transaction (i.e., transaction-specific harms)” and that are “related to the Commission’s responsibilities under the Communications Act and related statutes,” and we “will not impose conditions to remedy pre-existing harms or harms that are unrelated to the transaction.”

For the CenturyLink-Level 3 deal, the FCC found those transaction-specific harms to be virtually non-existent. The sole condition it attached to its approval was a five year price freeze on business services in 10 buildings scattered across the U.S. (but none in California), where Level 3 and CenturyLink both serve customers. That’s out of 4,600 buildings where the two companies currently compete.

The loss of an independent dark fiber competitor to a legacy telco with a monopoly-centric focus on lit services isn’t a problem, according to the FCC decision, because 1. there’s no meaningful difference between dark fiber and lit service and 2. the federal justice department took care of any imaginable problems by requiring the new company to lease out 24 dark fiber strands on 30 particular intercity routes, including five in California.

Pai and the other two republicans on the commission, Michael O’Rielly and Brendan Carr endorsed the decision; democrats Mignon Clyburn and Jessica Rosenworcel disagreed with it, to one extent or another.