On December 21, 2016, the FCC issued a Public Notice announcing that applications had been filed for the “transfer of control of Level 3 Communications, Inc. to CenturyLink, Inc.” Nearly nine months later, the FCC still has not made a decision on the potential merger despite the pro-competitive public benefits the transaction would create. The FCC should make a decision very soon.
On June 9, 2017, the FCC paused the 180-day shot clock at 170 days because it said additional data was needed to supplement the applications. Although the FCC may have had good reason to pause the shot clock, the FCC often takes more than 180 days to review transaction requests. In March 2017, Free State Foundation President Randolph May published a Perspectives from FSF Scholars entitled “A Proposal for Improving the FCC’s Merger Review Process.” In this proposal, he urges the FCC to improve the timeliness of its decisions and to refrain from imposing extraneous conditions when reviewing mergers. In some instances, the reason the FCC fails to meet its 180-day deadline is because it spends time considering the imposition of extraneous merger conditions, which, in effect, are company-specific regulations.
Currently, twenty states have approved the potential CenturyLink-Level 3 merger, and it’s possible the remaining states could be waiting on the FCC to make a decision. (See this March 2017 blog by Seth Cooper questioning whether, in any event, state regulators should be conducting duplicative merger reviews.) CenturyLink originally stated that the merger should be complete by September 30, but it recently revised that time frame to October 12, 2017, according to TRDaily (September 12, 2017). This goal is certainly in reach because on September 8, 2017, CenturyLink filed an ex parte with the Commission saying it will complete the submission of supplemental data “shortly.” Upon this submission by CenturyLink, the FCC should aim to complete its merger review promptly.
Most importantly, if approved, this merger would provide consumers with benefits in the markets of broadband, video, and business data services. In January 2017, Free State Foundation Senior Fellow Seth Cooper authored a Perspectives from FSF Scholars entitled “CenturyLink-Level 3 Merger Should Bring Pro-Competitive Public Benefits.” He explained how “any conceivable harm from the proposed merger appears less likely and less substantial than the likely benefits.” And he explained that the merger would not harm competition in the video or broadband markets:
Importantly, CenturyLink/Level 3 raises no vertical integration concerns related to the residential broadband or video services markets. Unlike CenturyLink, which serves 6 million residential broadband customers, Level 3 is not a residential broadband Internet service provider (ISP). Also, whereas CenturyLink serves about 318,000 residences with its PrismTV multi-channel video programming service and also plans to roll out an over-the-top skinny-bundle video offering, Level 3 is not a video service provider. The merger would nowhere reduce the number of ISPs or video service providers serving residential customers.
Additionally, the combined CenturyLink/Level 3 would enhance competition in the market for business data services. As Seth Cooper explains, the potential merger would create cost savings by reducing the number of business arrangements needed to effectively serve multi-location customers, and it would increase the direct knowledge of business data network functions, “enabling swifter response to network malfunctions and ensuring quality of service guarantees are satisfied.” Therefore, the sooner the FCC realizes the pro-competitive benefits of this merger, the sooner these two companies can combine their resources to better serve consumers with enhanced offerings and lower prices.
Because this potential merger would have no negative impact on competition, the FCC should not need 180 days to determine that the merger would be beneficial to consumers. And, in general, the FCC should be able to make timely merger decisions. One way to do that is to refrain from imposing unnecessary merger conditions.
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