Embarq and CenturyTel received the final two state approvals—P...

voted Thursday to approve the merger with conditions. Several Pennsylvania commission members issued a statement dissenting with a portion of the decision in which the commission elected not to continue a rate freeze dating to the spin off of Embarq from Sprint and not to accelerate broadband commitments demanded of Embarq. The company has 30 days to accept the Pennsylvania conditions, which stipulate that the merged company must maintain “substantially the service levels” in place for wholesale operations, subject to reasonable and normal allowances for the integration of their systems; that the company negotiate multiple contracts simultaneously when that approach “will aid in addressing common issues;” that the company adopt the Embarq Administration and Service Order Exchange (EASE) service order system; that for the first three years following the merger, it report quarterly on integration of billing systems and business and repair office operations, with speed of answer statistics included in the report and for the same period, report quarterly the number of company personnel associated with maintaining Pennsylvania network facilities, with the level of maintenance expense and personnel detailed. In addition, the commission conditioned its approval on the company fulfilling service quality reporting obligations outlined in the 2005 Spinoff settlement for three years after the merger is completed. The merged company may not protest or challenge a competitive local exchange carrier’s right to interconnect or refuse to extend their interconnection agreements because the CLEC is providing wholesale service, the commission said. The final condition is that “any merger conditions imposed by the Federal Communications Commission with regard to offering stand-alone DSL also shall be extended to Embarq’s Pennsylvania customers to the extent possible,” the regulator said. It reserved the right to incorporate additional conditions mirroring those the FCC sets. Washington regulators also set a long list of conditions. The most prominent include restricting dividend payments under certain conditions; extending Embarq’s Service Quality Guarantee program to customers of both companies for one year after the deal is completed; requiring a credit of $15 to residential and $25 to business customers for missed service or installation appointments; informing customers of any name change or new billing system; ensuring that no costs incurred as branding or transition expenses are passed on to Washington ratepayers; giving Washington customers who use CenturyTel or Embarq for their long-distance carrier 90 days to choose another provider without a $5 switching fee; and a one-year minimum ban on requests to raise basic residential phone rates. Meanwhile, Virginia’s Corporation Commission said it told Embarq to gradually reduce charges for other phone companies to connect to its local network. The first cut will be made in two phases to be completed by July 1, 2011, the commission said. It said the gradual approach will reduce any upward pressure on basic local phone rates for Embarq customers. The Commission found that the carrier’s revenue from intrastate-access charges amounts to a subsidy to Embarq that’s out of step with state policy promoting competition and a level playing field in Virginia’s telecom market.