Proposal signed on conditions for Qwest, CenturyLink merger

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Qwest and CenturyLink have agreed to invest a minimum of $80 million in broadband infrastructure in Washington state over the next five years, under a proposed agreement signed by the Public Counsel Section of the Washington State Attorney General's Office, Qwest, CenturyLink, and the staff of the Washington Utilities and Transportation Commission in the merger case of the two companies.

A large part of the investment will be used to improve the availability of broadband in areas of Qwest and CenturyLink territory where service isn't available or speeds aren't sufficient, said Senior Assistant Attorney General Simon ffitch, head of the Public Counsel Section.

Other highlights of the settlement include:

• Basic residential telephone rates are frozen for at least three years for all customers, as are basic business rates for CenturyLink business customers.

• Qwest basic business rates are limited to a $1 increase – up to a $30 per month maximum – for the next three years.

• Qwest and CenturyLink can't collect any of the costs of the merger from their customers in rates, including any transaction, branding, integration, or increased management costs. These costs will be paid by shareholders. The companies have agreed not to request in the future a higher rate of return than would have applied without the merger.

• The merged company will continue to offer a "DSL only" plan.

• The merged company will continue to honor terms of service for plans purchased before the merger; for example, "price for life" contracts.

• CenturyLink agreed to mirror Qwest by adopting a $25 credit for a missed appointment and a $5 credit for service failures.

• CenturyLink and Qwest agree to extensive reporting requirements to allow the commission to track the impact and implementation of the merger. They will provide information on financial conditions, service quality, broadband deployment, capital expenditures, and integration of the companies.

• The companies commit to better promoting Lifeline, a program that offers reduced phone bills for low-income customers, and to improve how they handle complaints from Lifeline customers.

Qwest and CenturyLink have estimated that the merger of the two companies will generate approximately $625 million in savings on a national basis. The Washington agreement requires that the companies track and report achieved savings in the state.

The settlement agreement also provides for a full financial and regulatory review of the post-merger company no later than four years from now. In this review, the commission would look at company earnings levels, savings, broadband deployment achieved, consumer rates, and the appropriate level of regulation for the company's services.

"The proposed agreement is a good one for the citizens of our state," said ffitch. "The conditions that were negotiated – including a substantial commitment to broadband investment and significant rate freezes – will help ensure there is no harm to the public interest, which is the UTC's guiding principle when considering mergers."

The settlement agreement is subject to review by the commission.

Not all parties taking part in the merger case before the commission have reached agreement with Qwest and CenturyLink. Those parties may recommend additional conditions.

The three-member UTC, which isn't bound by the staff recommendation, is expected to make a decision on the merger request in early 2011.

Public comments

The commission will hold a hearing on the merger at 5:30 p.m. Jan. 5, in the Commission's Hearing Room, Richard Hemstad Building, 1300 S. Evergreen Park Drive, Olympia.

Consumers can also submit written comments through Jan. 7 to UTC, P.O. Box 47250, Olympia, WA, 98504 or by e-mail to comments@utc.wa.gov. Include your name and mailing address and docket No. UT-100820.

For more information for boomer consumers, see my blog The Survive and Thrive Boomer Guide.