SEATTLE (Legal Newsline) - Washington Attorney General Rob McKenna announced on Tuesday that he has reached an agreement with Qwest, CenturyLink and the staff of the Washington Utilities and Transportation Commission concerning a proposed merger.
Under terms of the agreement, Qwest and CenturyLink will invest a minimum of $80 million in broadband infrastructure in the state of Washington in the next five years. A large percentage of that money will be used to improve the availability of broadband access in areas where neither company offers service or where the speeds they do offer are insufficient.
"The proposed agreement is a good one for the citizens of our state," Senior Assistant Attorney General Simon Ffitch said. "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 also calls for all basic residential telephone rates and basic business rates to be frozen for at least three years. Qwest basic business rates, currently "price deregulated," are also limited to a $1 increase - up to a $30 per month maximum - for the next three years.
CenturyLink and Qwest may not collect any costs associated with the merger from rate increases or any transaction, branding, integration or increased management costs. All costs must be paid exclusively by shareholders in the companies.
Additionally, the companies may not request a higher rate of return in the future than would have applied without the merger.
Once merged, the company will continues to offer a DSL-only plan and will honor terms of service for plans purchased before the merger.
Since Qwest had a program in place to provide a $25 credit for a missed appointment and a $5 credit for service failures, CenturyLink will also now offer those plans.
The two companies have also agreed to extensive reporting requirements so the UTC can track the impact and implementation of the merger. This requires both companies to provide any relevant information on financial conditions, service quality, broadband deployment, capital expenditures and integration.
Qwest and CenturyLink have also agreed to promote the Lifeline program better, which offers reduced phone bills for low-income customers. They will also work on how to improve complaints from these customers.
The settlement agreement also provides for a full financial and regulatory review of the post-merger company at some period in the next four years.
Qwest and CenturyLink have estimated that the merger of the two companies will generate approximately $625 million in synergy savings on a national basis. A three-member UTC, which is not bound by the staff recommendation, is expected to make a final decision on the merger request in early 2011.