Incompas: CenturyLink, Level 3 Fail to Prove Merger Would Benefit Public Interest

Incompas, the industry association formerly known as COMPTEL, says CenturyLink and Level 3 Communications have failed to show their planned merger would serve the public interest.

In a previous filing with the Federal Communications Commission (FCC), Incompas said the merger could decrease competition and slow development of innovative fiber infrastructure. In its latest filing, the association says CenturyLink and Level 3 have focused their responses “almost exclusively on the data sources used to determine the number of buildings within CenturyLink’s incumbent local exchange carrier (ILEC) service area that will go from two to one fiber-based provider as a result of the transaction.”

“In so doing, the applicants neglect to address the main argument raised by Incompas: the applicants have not met the standard of review for merger approval because they have failed to establish ‘the proposed transaction, on balance, serves the public interest,’” it said. “Precedent dictates that the Commission consider whether the proposed transaction ‘will enhance, rather than merely preserve, existing competition.’ The applicants have yet to demonstrate that the combined company will increase facilities-based competition – namely that it will build connections to buildings outside of CenturyLink’s ILEC territory on a larger scale than Level 3 would on its own –and assure competitive use of those facilities at the same or more favorable rates, terms and conditions than those offered by Level 3 today. As it stands, the applicants have not provided evidence – or even a statement – of an intent to build vigorously outside CenturyLink’s ILEC region.”

Responding to Incompas’ filing, CenturyLink said “we continue to believe this transaction is in the public interest and will strengthen the nation’s IP infrastructure and provide competitive alternatives for the enterprise business segment.”

The loss of a nationwide competitive builder creates a “significant harm to customers who otherwise would have an alternative fiber provider to the incumbent monopolist,” Incompas said. Instead, the applicants “merely cite the benefits the transaction will bring to the merged entity, not to the public,” it said.

“In addition to failing to demonstrate how the transaction increases competition in enterprise services markets to the benefit of enterprise customers, the applicants gloss over the public-interest concerns that the transaction will actually undermine competition by eliminating choice of last-mile, facilities-based providers for enterprise customers in many buildings,” it said. “The applicants have entirely failed to respond to Incompas’ concern that they have limited their analysis of impacted buildings to only those buildings where they both have lit fiber facilities in place today and may omit buildings where they offer carriers the opportunity to buy wholesale fiber-based Ethernet at lit building rates.”

Incompas said CenturyLink and Level 3 also have not responded to its concern that their analysis may significantly understate competitive overlap between the applicants because it does not include buildings where CenturyLink is currently offering business data services (BDS) via copper facilities.

“The Commission must ensure the applicants sufficiently address these concerns and the other concerns raised in the proceeding prior to approval of this transaction,” it said. “Moreover, the applicants have stated that their overlap analysis (is) ongoing and that they will submit their results in the record. The Commission should not make any decisions on the transaction until the applicants have updated the record and provided third parties a sufficient opportunity to review their revised analysis.”

The CenturyLink-Level 3 merger is anticipated to close on Sept. 30.