AG's office looks at CenturyTel merger

The Washington State Attorney General’s Office wants more consumer protection placed on the proposed merger of phone companies CenturyTel and Embarq.

CenturyTel, based in Monroe, La., provides local telephone service in Washington to about 150,000 customers in small and mid-sized cities, including in the Snoqualmie Valley.

The company agreed last October to acquire its local rival Embarq in an all-stock deal for about $5.8 billion, excluding debt. Including debt, the deal is reportedly worth about $11.6 billion. The proposed merger would give CenturyTel and Embarq an operating presence in 33 states.

“CenturyTel and Embarq have provided little information about how they plan to operate after their pair up,” Assistant Attorney General Sarah Shifley said. “We want to ensure that service is not degraded and that customers benefit from any reductions in company expenditures.”

The attorney general's Public Counsel section represents residential and small-business customers before the Utilities and Transportation Commission, which is considering the merger request.

In expert witness testimony filed with the state Utilties and Transportation Commission, Public Counsel raised a number of concerns about the proposed merger, including how integrating operations of the two companies might lower the quality of service. To ensure that customers are not harmed, Public Counsel recommended several conditions, including written notice to all customers of the merger and any service changes, including new company names or changes to billing format, and that any savings resulting from the merger be shared with ratepayers in the form of bill credits. The attorney general's office asked that costs from the merger not to be passed along to consumers in the form of higher rates, and called for additional investment in DSL and broadband availability. Embarq and CenturyTel provide high-speed Internet service, as well as phone service.

The commission will consider the recommendations along with testimony filed by other parties and will hold evidentiary hearings in Olympia this April. UTC approval is required for the merger to take place. The UTC may approve, approve with conditions or reject the merger and is expected to issue a decision by June 2009.

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