CenturyLink, Level 3 Edge Toward Final 2 State OKs; FCC Clock Still Paused
New Jersey may soon approve CenturyLink’s acquisition of Level 3, and California’s review may wrap in October, said stakeholders and observers. The companies have all other state OKs but also need FCC approval. The companies agreed to settlements with consumer representatives in New Jersey and California, but a VoIP provider and a nonprofit focused on broadband adoption are challenging the deal at the California Public Utilities Commission. CenturyLink still aims to close the $34 billion buy by the end of Q3, a spokeswoman said.
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CenturyLink and Level 3 could get a New Jersey OK as soon as next week, said two parties to the review. The Board of Public Utilities meets Wednesday, but hasn’t released an agenda, a spokeswoman said. The companies, Division of Rate Counsel and state attorney general agreed to a settlement earlier this month. The settlement stipulation, signed by the companies Aug. 3 and others Aug. 7, included a condition that the new company would continue to compete for business data services in the Verizon New Jersey territory for at least three years. The companies agreed to notify the board and rate counsel about copper retirement and to comply with Connect America Fund and other FCC broadband rules. Other commitments involved job protections and reporting on retail phone and DSL services.
No hearing is planned in California and the CPUC will issue a proposed decision within 60 days, with commissioners allowed to vote on it 30 days later under rules, the CPUC said in a Tuesday scoping memo. It said CenturyLink wanted a vote by Sept. 14, but the company later said it still hopes for a decision within 60 days (see 1708160019). The schedule is “good news and bad news for CenturyLink and Level 3,” said Tellus Venture Associates President Steve Blum, who represents local governments. “Bad news because there's virtually no chance of a final decision by the end of September, but the good news is there's a reasonable chance of making the [Oct. 31] deadline if the ALJ keeps the proceeding on track and the opposing parties don't engage in a scorched-earth defense.”
The Utility Reform Network (TURN) and other California consumer groups settled with the companies, but another protester -- the California Emerging Technology Fund (CETF) -- held out from the agreement (see 1707100014). “We are not opposed to the transaction, but have not yet reached agreement with CenturyLink-Level 3 and will continue through the established CPUC process” per this week’s scoping memo, said CETF President Sunne McPeak: “We would like to see this matter concluded as soon as possible" with "specific quantified public benefit contributions as has been the commitment of other companies seeking approval for corporate consolidations in California.” CETF wasn’t satisfied by the companies’ broadband commitments, the nonprofit commented July 21.
VoIP provider Telnyx warned California regulators that the deal may reduce competition for wholesale service it buys, with particular detriment to rural areas (see 1708080023). CenturyLink disputed similar Telnyx comments in April at the FCC (see 1704280034). “Telnyx is heartened that the CPUC has included in its scope of consideration whether the merger raises considerations with respect to disadvantaged communities,” a spokeswoman said. “Telnyx is going to continue to try to be a positive voice for competition in this proceeding and welcomes the collaboration of any individuals, legislators or industry peers.”
“TURN supports the joint settlement” and doesn’t “believe any further comments or hearings are necessary for the Commission to find this merger in the public interest in California,” said Managing Director-San Diego Christine Mailloux.
With FCC review on hold, the companies are submitting more information to the federal agency. Its 180-day shot clock was still suspended at Day 170. "We continue to submit information to the FCC, but defer to the FCC about when they might reinstate the shot clock," CenturyLink's spokeswoman said. An FCC spokesman said the clock is stopped but didn't say when it would resume.