No express lane offered for CenturyLink, Level 3 review at CPUC

by Steve Blum • , , ,

“I’m hoping there’s something more that the parties can do to prepare for a decision at a later date”, Regina DeAngelis, an administrative law judge with the California Public Utilities Commission, told lawyers for CenturyLink, Level 3 and a handful of organisations that have involved themselves in the regulatory review of the two companies’ plan to combine into one. She presided over yesterday’s pre-hearing conference at the CPUC’s San Francisco headquarters – the opening event of what could be an enquiry lasting several months.

Which is exactly what CenturyLink and Level 3 are trying to avoid. And what DeAngelis was warning might happen.

The deal they struck last October has CenturyLink buying Level 3 for $34 billion. In order for that to happen, they need to get approval from two federal agencies – the Federal Communications Commission and the justice department – and a couple dozen or so states that have chosen to play an active role in telecoms oversight. They gave themselves a year to finish those reviews and close the sale, but left the door open for extending it by mutual agreement. They also set 30 September 2017 – eleven months – as a benchmark date, when transaction costs begin to creep up.

So they’re trying to push the pace of the CPUC’s review. They started out by asking for commission approval by mid-September, but given mandatory public notice requirements – 30 days before commissioners vote on a proposed decision – DeAngelis threw cold water on that idea, saying “I can tell you that won’t happen”.

It doesn’t seem like two extra weeks will help much, either. That would require turbo-charging standard operating procedures and, as DeAngelis wryly noted, “this commission isn’t often known for moving that quickly”.

That’s particularly true when a merger or other major transaction involving regulated companies attracts formal protests. In this case, five organisations formally challenged it. Three settled their differences with CenturyLink – the CPUC’s independent office of ratepayer advocates (ORA) and two consumer groups, the Greenlining Institute and TURN. Lawyers for Greenlining and ORA were at yesterday’s conference, and endorsed CenturyLink’s push for a fast decision.

Two others are still in the fight, though. The California Emerging Technology Fund wants CenturyLink to spend more money in California, with its guidance, and VoIP provider Telnyx objects to what it says are plans to shut down Level 3’s independent wholesale business after the sale closes. With active third party opposition added to the CPUC’s responsibility to do its own due diligence, an expedited decision is not the way to bet.

The next step is for DeAngelis to issue a scoping memo, which be the roadmap and schedule for the rest of the proceeding.