The proposed merger between Consolidated Communications and
FairPoint Communications, if approved by regulators, would likely enhance
competition for broadband services. So far, the transaction has sailed through federal
agency reviews. Yet the proposed Consolidated/FairPoint merger still faces
parallel reviews by several state public utility commissions (PUCs). Surely,
the transaction deserves state PUC reviews that are timely and focused on likely
competitive effects.
In a transaction worth $1.5 billion, Consolidated
Communications and FairPoint Communications would combine their fiber networks,
thereby expanding their Ethernet footprint and serving multi-location enterprise
broadband customers as well as wireless backhaul customers with faster speeds
and better reliability. The proposed Consolidated/FairPoint merger poses no
apparent downside for residential or business customers of voice or broadband
services. The two providers do not compete head-to-head anywhere. And neither
party to the merger ranked in the top
10 for Ethernet ports in the U.S. at mid-year 2016.
Not surprisingly, the transaction speedily received
antitrust clearance by the Federal Trade Commission. A
review by the Federal Communications Commission, which elicited only one public
comment, will likely be concluded in short order. However, the proposed
Consolidated/FairPoint must still undergo a multiplicity of regulatory reviews
by state PUCs. It has been reported
that the transaction must receive approval in 17 states.
Mergers that are pro-competitive on their face should not be
slowed down by numerous and overlapping reviews by federal and state regulatory
agencies. More particularly, parallel state PUC reviews of merging
telecommunications providers ought to consider only merger-specific competitive
effects and be conducted in a timely manner. State PUC merger reviews that fail
to follow such a course are highly problematic. As I explained in a March
6 blog post regarding the proposed CenturyLink/Level 3 merger:
State PUC regulators can succumb in
merger reviews to many of the temptations that have plagued FCC reviews.
Regulators can become preoccupied with non-merger specific issues and use their
leverage to impose regulatory conditions on their approval that are unrelated
to the transaction or perhaps more fit for industry-wide rulemakings.
Going forward, state PUCs reviewing the proposed
Consolidated/FairPoint merger should consider only the transaction’s
competitive impact. State PUCs should not impose unnecessary conditions and
they should conclude their reviews promptly.
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