NASUCA: Consensus is CenturyTel’s Purchase of Qwest an Anticompetitive Move
Almost all commenters predicted that CenturyTel’s proposed acquisition of Qwest would hurt broader wireline competition, the National Association of State Utility Consumer Advocates said in reply comments on an FCC public notice about the merger. But the association said it has little hope from the commission’s track record that the deal will be rejected. The Independent Telephone & Telecommunications Alliance urged approval. The $10.6 billion deal was announced in April.
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"Most of the comments focus on the specter of harm to competition -- which of course harms the consumers who are supposed to benefit from the competition,” NASUCA said. “Other comments address the direct threats to consumers, through deteriorated service quality and failure to bring about the broadband benefits touted by the applicants. The only commenter [in the comment round] to support the merger is a supplier of broadband access equipment that apparently believes (or finds it in its interest to express belief in) the applicants’ broadband claims.”
"Nothing in others’ comments assuages NASUCA’s concerns” about the deal, the association said. “On the other hand, the comments do not give NASUCA any confidence that the Commission will see fit to disapprove this transaction, when it has approved the other recent transactions with conditions.” NASUCA was sharply critical of the merger: “Layering another massive integration on top of the not-yet-complete Embarq integration may strain CenturyLink management attention, introduce unanticipated costs and place service quality at risk."
ITTA, which represents midsized wireline carriers, noted that the FCC has approved many similar transactions. It called the deal pro-competitive. The takeover “should result in an otherwise unavailable opportunity to leverage economies of scale and scope and to not only deliver greater efficiencies to end users, but to also speed the delivery of broadband and other advanced services,” the association said. CenturyTel and Qwest “have natural incentives to continue their investment and innovation in rural and small urban markets,” it said.
Sprint Nextel said it agrees with several commenters that the proposed merger “has the potential to cause substantial harm to the telecommunications marketplace and that the parties have failed to demonstrate a corresponding public benefit.” The combined company “will retain monopoly pricing power in the special access and switched access markets,” Sprint said. “As a holding company, the larger CenturyLink can use this pricing power to leverage control over the retail interexchange, enterprise and special access markets."
Level 3 supported the merger, but only with “targeted, common sense conditions” that it said would eliminate a threat to competition. The company said the FCC should extend the duration of interconnection agreements for three years, provide “explicit guidance” on the handling of ISP-bound traffic and address switched-access pricing in the combined company’s service territory.