California consumer groups allow CenturyLink to end dark fiber leasing

3 July 2017 by Steve Blum
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If CenturyLink is allowed to buy Level 3, then California will lose a major source of dark fiber. That’s my reading of a settlement agreement between CenturyLink, Level 3 and three of the organisations that challenged the deal at the California Public Utilities Commission. The fourth challenger, the California Emerging Technology Fund, isn’t part of the agreement.

The CPUC’s office of ratepayer advocates and two consumer advocacy groups – TURN and the Greenlining Institute – agreed to drop their protest in exchange for several concessions from CenturyLink, including a pledge to “aspire” to spend some of its planned capital investment in California on network expansions and upgrades, particularly in under and unserved communities. The groups will be able to offer opinions on where new fiber routes will go, but the decision will be up to CenturyLink, albeit with an undefined and not necessarily binding review by the CPUC.

But that fiber will only be available in a way that suits CenturyLink’s monopoly-centric legacy telco business model. Which doesn’t include leasing dark fiber to potential competitors or to major customers who don’t want to buy bandwidth by the bit at retail prices, as Level 3 does now. The agreement allows CenturyLink to stop selling dark fiber after, briefly, giving notice…

For the period of time starting with the date of the closing of the transaction through December 2019, CenturyLink and the Level 3 Operating Entities will provide the Commission with 90 days-notice if a decision is made to terminate Level 3’s current practice of leasing dark fiber in California to unaffiliated wholesale and enterprise customers.

Existing dark fiber leases are only protected for two years…

For the period of time starting with the date of the closing of the transaction through December 2019, CenturyLink and all Level 3 Operating Entities shall not seek to terminate or materially revise any California enterprise or wholesale existing contract after the merger closes solely as a result of the merger.

CenturyLink would be bound by existing contracts, of course, but many contain cancellation clauses and are not always locked in for long terms.

The erstwhile protestors and the companies involved are also asking the CPUC administrative law judge managing the review to bypass the normal public, and lengthy, process and put the transaction on a fast track to approval.

Settlement agreement between CenturyLink, Level 3, CPUC office of ratepayer advocates, TURN and Greenlining, 27 June 2017 (public version)
Joint motion to approve settlement agreement, 30 June 2017 (public version)
Joint motion to shorten time for review of CenturyLink-Level 3 transaction, 30 June 2017
Joint motion to file proprietary information under seal, 30 June 2017