FCC Approves Qwest-CenturyLink Merger

During the FCC approval process, the companies agreed to take measures to significantly expand access to high-speed Internet and work to increase adoption of broadband among low-income consumers.

The Federal Communications Commission (FCC) on Friday approved the merger of CenturyLink, Inc., and Qwest Communications, Inc.

CenturyLink announced in April 2010 plans to acquire Qwest in a stock swap worth about $10.6 billion.

Since announcing the pending merger, the companies have sought regulatory approval amid complaints from smaller competitors that depend on Qwest's systems, through which they share portions of Qwest's phone network and access services at a wholesale price. These competitors questioned the merged company's ability to foster competition and continue to provide access to services.

In addition to FCC approval, the merger has garnered support from the Federal Trade Commission, key unions, competitor Integra Telecom, and 20 other states, including Minnesota, which approved the deal earlier this month.

“The FCC's approval solidifies our plan to complete the transaction on April 1,” Qwest Chairman and CEO Edward Mueller said in a statement. “The combination of CenturyLink and Qwest will create a new force in the telecommunications industry that will provide its customers with innovative solutions to meet the challenges of tomorrow.”

Qwest and CenturyLink have reached agreements with many smaller carriers, including several in Minnesota. As part of the approval process, the companies committed to investing at least $50 million in broadband infrastructure in Minnesota over five years.

During the FCC review process, the agency said that it “imposed protections against the risk of harm to competition and ensured the merged entity will live up to its commitments to significantly expand its network and launch a major broadband adoption program for low-income consumers.”

Under the FCC's approval terms, the merged company is required to offer broadband to qualifying households starting at less than $10 per month, increase the capacity of Qwest's network to bring broadband with download speeds of at least 4 megabits per second (Mbps) to at least 4 million more homes and businesses, and more than double the number of homes and businesses that can receive 12 Mbps broadband, among other measures to expand high-speed Internet adoption.

Also, there is a stipulation that prohibits CenturyLink from increasing rates for seven years in about 40 buildings that have been singled out due to a high risk that certain services might become less available as a result of the merger. About 30 of those buildings are located in the Twin Cities metro area.

Qwest spokesman Tom McMahon on Monday told Twin Cities Business that the Public Utility Commission of Oregon is the final entity from which the companies are awaiting approval-and an answer is expected as early as Monday, March 21.

Denver-based Qwest is Minnesota's largest telecommunications provider and employs about 3,300 in the state. Upon announcing the potential merger, Qwest projected that the combined company will have almost 18 million phone lines in 37 states. The companies anticipate serving roughly 1.45 million lines in Minnesota following the merger.