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Tuesday, June 30, 2009

FCC Begins Final Review Of Century Tel - Embarq Deal
Story from the Wall Street Journal

WASHINGTON – The Federal Communications Commission is in the final stage of reviewing CenturyTel Inc.'s $11 billion acquisition of Embarq Corp. and could sign off on the deal as soon as this week, clearing the last regulatory hurdle facing the merger of the two midsize phone companies.

The three-member FCC board is waiting to review a final draft of a deal to approve the merger, said people familiar with the review, although negotiations on merger conditions have been substantially completed. The deal received shareholder approval in January and a final nod from state regulators last month.

The companies have agreed to provide faster Internet speeds to their broadband customers at the request of the FCC. The companies committed to providing substantially higher speeds to customers in rural areas within a relatively short time frame to gain the FCC's approval of the deal, which was announced in October.

The FCC's insistence on improved broadband service for rural customers as part of the deal shows how its been focusing more intensely recently on ways of getting more Americans online at faster speeds. The agency is currently working on a national broadband plan designed to offer a roadmap for improving Internet access across the country.

In past years, the FCC has focused more on Internet retail pricing, not speeds, in other recent phone company mergers, including AT&T Inc.'s acquisition of BellSouth Corp. in 2006.

Within three years, the combined company has pledged to offer at least some broadband service to retail customers who are connected via lines that can transmit Internet data.

At least 90% of broadband customers would have download speeds of at least 768 kilobits per second within three years. Within two years, 87% of customers with broadband access would have download speeds of at least 1.5 megabits per second.

Additionally, the companies promised to offer speeds of three megabits per second to 75% of broadband customers within a year of the close of their merger and increase that access to 80% of customers within three years.

On Friday, the two companies signed off on a series of relatively minor conditions, many of which focus on requirements that the newly combined company adopts Embarq's business practices in dealing with wholesale customers.

The combined company, which will be called CenturyLink, will operate in 33 states, with 7.5 million phone lines, 2.1 million broadband subscribers and 440,000 video customers.

A spokeswoman for Embarq declined to comment, citing the FCC's ongoing review of the deal. A spokeswoman for CenturyTel couldn't immediately be reached for comment.

The FCC is on a relatively tight deadline to sign off on the deal, since it will lose one member when the Senate confirms incoming Chairman Julius Genachowski. A Senate vote on Mr. Genachowski's confirmation could come as soon as this week.

Another Democratic FCC commissioner, Jonathan Adelstein, will leave the board when Mr. Genachowski arrives. FCC officials want to complete the deal before the new chairman arrives so that it won't be delayed any further.