Oops, CenturyLink rebuttal makes the case for CPUC intervention

16 May 2017 by Steve Blum
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CenturyLink had to say something, and there probably wasn’t much else it could say, but its response to protests filed against its proposed acquisition of Level 3 does as much to encourage a rigorous review by the California Public Utilities Commission as it does to dissuade it.

The formal opposition to the transaction comes from a coalition of consumer advocacy groups – TURN, the Greenlining Institute and the CPUC’s office of ratepayer advocates – and the California Emerging Technology Fund. CenturyLink’s response correctly points out that some of the demands have a letter-to-Santa ring to them. Suggested remedies such as employment, diversity and build out obligations are nice things, but also dance around the central problem with the transaction: California’s long haul fiber market will go from three traditional phone companies – CenturyLink, AT&T and Verizon – plus one independent – Level 3 – to just three legacy carriers with similar, monopoly-centric business models.

But what CenturyLink is trying to do right now is head off an intensive review by the CPUC, and avoid wrangling over side issues altogether. It has two problems, though. First, the CPUC has already rejected its bid for summary approval once – that boat has sailed. Second, elimination of a competitor in a market that’s already highly concentrated is exactly the sort of outcome that is adverse to the public interest and therefore grounds for rejecting the deal. As CenturyLink was kind enough to point out

In reviewing these applications over the years, the Commission has repeatedly and consistently found that the “primary question” to determine in a transfer of control proceeding under [the summary approval process] is whether the transaction will be “adverse to the public interest”…

In brief, where – as is the case here – there is no interruption of service, no change of tariffs, no transfer of operating authority, no customer transfers, no elimination of providers, the transactions have unfailingly been found not to have any adverse impact on the public.

CenturyLink then slathers on the nonsense, claiming 1. since it doesn’t directly serve Californian consumers (a genuinely de minimis extension of its Oregon network into Modoc County aside) it can’t do harm – except that without an independent Level 3 around it can squeeze competitive, consumer focused ISPs mercilessly – and 2. Level 3 will still technically be an independent company. Fortunately, CenturyLink refutes its own bullshit and later claims – without irony – that the combined company will be able to “rationalize existing facilities” and otherwise act as a single, monopoly model-driven despot.

Full review or not, CenturyLink wants to get it done by the end of September. In California, that’s not the way to bet.