CenturyLink-Qwest Merger Update

CenturyLink-Qwest Merger Update

Merger Approvals:

The public relations folks at CenturyLink and Qwest are touting the approvals from the public service commissions of nine states and the District of Columbia. The nine states are: California, Georgia, Hawaii, Louisiana, Maryland, Mississippi, New York, Ohio, and West Virginia. What they do not indicate in their press releases, and which much of the media is not picking up on, is the fact that Qwest does not have any retail access lines in any of those states and that CenturyLink has access lines in only five of them -- California, Georgia, Louisiana, Mississippi and Ohio. What is more, the total access lines in those five states is 513,600 – about 7% of CenturyLink's total access lines and about 3% of the total access lines involved in the merger. A bit soon to be crowing that the approvals “demonstrate that the commissions recognize this transaction is very much in the public interest,” as CenturyLink's CEO was quoted as saying in the Denver Business Journal.

Twelve state commissions have not ruled yet, and those jurisdictions cover more than 17 times the number of customers that nine states (plus the District of Columbia ) do. They include Arizona, Colorado, Iowa, Montana, Nebraska, Minnesota, Oregon, Utah and Washington – states that cover 7.6 million Qwest customers. The local media would do well to monitor activity in those states, where the proposed merger of the two entities has the potential to cause much more disruption to customers and service quality than the states that have already weighed in.

CWA Files Testimony in Three States

CWA has filed testimony in three states that have commissions reviewing the terms of the proposed CenturyLink-Qwest merger: Minnesota, Colorado and Arizona. There are two parts to the testimony: first, a financial analysis by Randy Barber, a consultant that CWA has engaged as a subject matter expert in many similar proceedings before public service commissions. Second, testimony by CWA Vice President Jimmy Gurganus who reports on interviews conducted with local leaders in Ohio and North Carolina where integration of Century and Embarq is underway as a result of that recent merger. Both sets of testimony express our concerns about the ability of CenturyLink to adequately manage the integration of a company as large as Qwest, with urban markets and business markets that will be brand new to CenturyLink.

Key Points from the Barber testimony:

• This transaction is simply too much too soon, and it carries with it significant risks associated with the planning and execution of the two companies' integration plans.

• The scale and scope of the proposed acquisition present considerable challenges and risks. CenturyLink has not yet finished digesting Embarq, and yet it now proposes to integrate Qwest, a company more than twice again its size. With this acquisition, CenturyLink seeks to grow by 800 percent in just over two years – from about 2 million access lines before the Embarq acquisition to 17 million lines with a CenturyLink/Qwest combination.

• Recently, elected federal officials have made similar comments about the need for careful regulatory scrutiny in conjunction with the Joint Applicants' proposed transaction. According to Communications Daily, five members of Oregon 's Congressional delegation “expressed concerns about the proposed CenturyLink-Qwest Merger. In a Sept. 8 letter to FCC Chairman Julius Genachowski, Sens. Ron Wyden and Jeff Merkley and Reps. Earl Blumenauer, Peter DeFazio and David Wu say they want reassurance that the commission will make sure the new company maintains its customer service and operational quality, and it 'can immediately provide non-discriminatory access.'”

• Many fundamental decisions regarding the combined companies' structure, operations, and systems will only be made after the closing of the merger and CenturyLink has assumed full control over Qwest.

Key Points from the Gurganus testimony:

• [CWA leaders in Ohio and North Carolina] who are technicians currently employed fulltime by CenturyLink and were previously employed fulltime by Embarq, report a range of problems that stem from some core structural flaws including: the systems themselves have “glitches”; the systems often do not coordinate with other internal systems; insufficient training and resources were provided to former Embarq employees about the new systems; and, inadequate staffing support to respond appropriately to the transition issues that have arisen.

• CenturyLink must successfully address the integration issues arising in Ohio and North Carolina so that the issues can be resolved in those states and avoided in the other states involved in the Embarq transaction. If these issues are not successfully addressed with the former Embarq operations, then the much larger task of integrating Qwest has a great potential to cause serious damage to CenturyLink and the customers it serves.

• Calls from techs get backed up because the workers in the center are trying to get the correct information from different sources. Also, the center is now handling two new states – Alabama and Georgia – and they both use different switches, so the programmers have to learn the new equipment. All of this means that the pace of work has slowed down. I was told that the service center assistants used to handle 50 to 60 calls a day, but that each call is now so time-consuming that the load has been cut in half.

• I also received a report that the new CenturyLink systems are so inefficient (improper orders, bad tickets, delays from being on hold while calling in for information that should have been included on the work orders) that tasks that should take a tech one hour to complete are taking as long as three hours.

Hearings Scheduled

Public service commission hearings will commence in Minnesota October 5 through Oct 7. In Colorado, hearings are scheduled for November 8 through 10. In Arizona, hearings are scheduled for November 15 through 16.

CWA Mobilization

There is still a need to raise our concerns in a public way. Local Presidents should write letters to elected officials and/or submit letters to the editor of the local newspaper. If you need copies of the materials previously sent out, please contact your Vice President or staff rep.