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Merger For High-Speed Telecom Companies Inches Forward

Posted  November 16, 2010

The potential acquisition of telecommunication company Qwest by Internet provider CenturyLink has cleared another hurdle.  Integra, a competitive local exchange carrier that both uses and resells Qwest network services, had fought the proposed deal because of the potential effects on its existing connectivity agreements with Qwest.  However, with a settlement agreement in place that ensures its rights under those prior contracts, Integra dropped its opposition to the deal.

The merger deal, valued at more than $22 billion, would create one of the largest telecommunications companies in the United States, with an extensive broadband network as well as landline telephone and wireless networks.  Because the combined company would present a formidable competitive force, many competitors still oppose the deal, such as the wireless carrier Sprint and other local exchange carriers.

Whether the Integra settlement agreement will act as template for future agreements remains to be seen.  The settlement agreement contains a number of concessions to Integra, including a guarantee that the combined company will not pass on merger expenses to Integra, a guarantee that Integra can prevent Qwest from making certain types of changes to its network, and the right for Integra to inquire into any deteriorations in Qwest network services.

The merger must also be approved by both the Federal Communications Commission and several state regulators.  The Department of Justice and the Federal Trade Commission do not oppose the merger.

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