Copps Reviewing Embarq-CenturyTel Merger Commitments
With less than a week left to review the Embarq- CenturyTel merger under the unofficial timeline, the FCC still hasn’t circulated a draft order, agency officials said Tuesday. The commission is expected to approve the $11.6 billion deal (CD May 22 p1), but is still reviewing merger commitments, said one official. The FCC’s 180-day shot clock expires Sunday, but the regulator hasn’t always met the self- imposed target.
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Meanwhile, the FCC is also nearing the end of the 180- day shot clock for a decision on AT&T’s proposed acquisition of Centennial. Wednesday is day 169 of that approval process for what’s expected to be the first wireless merger to be considered by the Obama administration. Some small carriers hope any decision will be put off so that all issues raised can get more attention.
The exact timing of the CenturyTel order is hazy, said an agency official. The office of acting Chairman Michael Copps is reviewing the voluntary commitments pledged by the merging companies in April, the official said. Once the draft is circulated, it shouldn’t take more than a few days for commissioners to finalize it, the person said.
Meanwhile, the merging companies and competitive local exchange carriers continue to fight over possible conditions that could be included in the FCC order. Competitors want the FCC to impose conditions beyond what Embarq and CenturyTel committed to. In phone calls last week with an aide to Copps, CLECs NuVox and Socket called for conditions related to unbundling, interconnection and special access prices, among other things.
CenturyTel and Embarq on Monday urged the FCC to reject competitor calls for conditions usually reserved for mergers involving former Bells. “There is no justification in either two decades of Commission merger precedents or in the factual record in this docket to impose BOC-like conditions on this instant merger,” the companies said in an ex parte letter. “The applicants do not now compete with each other, except for minimal, limited overlaps, and therefore there is no reduction of competition in any market as a result of this merger.”
Sprint Nextel, Cincinnati Bell Wireless and Cellular South all raised some questions about the Centennial-AT&T deal. The deal, while small because it adds 1.1 million customers to the 75 million AT&T has, has long been viewed as a test case of the FCC’s merger policy under a Democratic chairman (CD Jan 21 p4).
Leap Wireless and Verizon Wireless continue to fight over how to interpret the roaming conditions the FCC agreed to in signing off on Verizon Wireless’s buy of Alltel last year. The deals are interrelated. AT&T said last month it would pay $2.35 billion in cash to buy wireless assets Verizon got primarily through the Alltel merger, but had agreed to divest. AT&T said it reached agreement to sell Centennial assets in five service areas in Louisiana and Mississippi to Verizon for $240 million.
“Delay in action is fully appropriate now that Verizon and AT&T have announced plans to split between themselves prized properties that neither can acquire on its own,” said a small carrier source. “AT&T would get most of the Alltel divestiture property and Verizon would get portions of Centennial. AT&T has not yet amended its application to acquire Centennial but, when it does, the amendment should be deemed major by the commission and interested parties should be given the opportunity to file or update petitions.”
“I don’t see why the FCC should be in a hurry,” said a second small carrier source. Commissioners “need to take their time to consider all the competitive issues raised… they need to take their time to get this right.”