CenturyLink gets FCC approval for Level 3 acquisition, paves way to complete deal

CenturyLink has received FCC approval for its acquisition of Level 3, creating a greater competitive threat to AT&T and Verizon in the ever-changing enterprise services arena.

The FCC's approval follows prior approvals from the U.S. Department of Justice and the California Public Utilities Commission (CPUC).

CPUC approved the acquisition at a meeting on Oct. 12, 2017. California was the final state regulatory approval required.

RELATED: CenturyLink pleads with FCC to approve Level 3 acquisition

"The FCC's approval of CenturyLink's acquisition of Level 3 is great news and means we now have all the regulatory approvals we need to close the transaction," said John Jones, SVP of public policy and government relations, in a release.

CenturyLink now expects to close the acquisition on Wednesday, Nov. 1. Originally, CenturyLink set to wrap up the deal earlier this month.

A divided decision

While the acquisition can now be completed, not every FCC commissioner supported it. Commissioner Mignon Clyburn voted against approving the acquisition.

FCC Commissioner Clyburn Image: FCC
Mignon Clyburn

According to an FCC spokesperson, Commissioner Clyburn’s dissent is based on three reasons:

  1. Merger Examination process: The review alters the commission’s long-standing merger review standards.
  2. Business Data Services: resurrects a suspect market analysis from this year’s Business Data Services Order that substituted potential competition for actual competition.
  3. Market analysis: ignores an entire portion of the market, by failing to conduct a technology-neutral market analysis.

The remaining FCC commissioners have not yet released statements on their position on approving the CenturyLink/Level 3 merger yet.

Meeting conditions

CenturyLink’s acquisition of Level 3, which has been a long road, has not come without key conditions. As part of the consent decree with the U.S. Department of Justice, the combined service provider is being required to divest certain Level 3 metro network assets and certain dark fiber assets. On the metro network side, the new company will be required to divest Level 3 metro network assets in three metro areas: Albuquerque, New Mexico; Boise, Idaho; and Tucson, Arizona.

Upon completing the acquisition, the new company will continue to serve all current Level 3 customers unless they choose to be served by the buyer of divested assets in each metro area. Additionally, CenturyLink will be allowed to purchase some wholesale network services from the buyer of divested assets in each metro area. CenturyLink retains all its existing networks and business operations in these three metro areas and will continue to provide a full suite of telecommunications and data services to residential and business customers.

The requirement to divest some of its wireline assets has raised speculation that a sale could attract a host of competitive telcos and fiber or cable operators such as Zayo, Uniti, Comcast, Verizon and TDS to the bidding table. These carriers could use these assets, which are scattered in different parts of the country, to fill in coverage gaps.