11. Comments
The draft decision of Commissioner Susan P. Kennedy in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g) and Rule77.7 of the Rules of Practice and Procedure.292
On November 8, Applicants, Greenlining, LIF, Pac-West, Qwest, Earthlink (Motion to Intervene), CISPA, ORA, DRA, Cox, and TURN filed Comments. On November 14, the Applicants, CALTEL, Qwest, Greenlining, ORA, LIF, CISPA filed Reply Comments.
11.1. Position of the Parties
The Applicants argue that the U.S. DOJ's and the FCC's approvals of the proposed transaction confirm the draft decision's finding that the analysis will not harm competition and support the draft decision's approval of the merger. The Applicants further argue that the Commission should not adopt the conditions proposed in the draft decision. In particular, concerning DSL condition, the Applicants note that they have agreed with the FCC to provide naked DSL within 12 months of the close of the merger. The Applicants ask that if the Commission elects to retain this DSL condition, that the requirement be made consistent with the FCC's requirement, including the sunset of the condition after two years.
Greenlining and LIF express support for the draft decision and urge its adoption by the Commission.
Pac-West renews its request that the Commission impossible a condition that requires the non-discriminatory interconnection of packet networks by ILECs, and then expand this condition to all subsidiaries of the merged entity.
Qwest argues that the reliance of the draft decision on the AG's Opinion commits legal error by ignoring compelling evidence in the record of this proceeding. In addition, it reasserts its argument that remedies are needed to guard against the anticompetitive effects of the merger.
CALTEL states that it does not support this draft decision, but asks that in the event of its adoption that the Commission open a rulemaking proceeding to adopt a form of price caps for wholesale services.
Cox argues that the draft decision commits legal error by failing to adopt the conditions that it proposed and by failing to discuss its proposals extensively.
Earthlink filed a motion to intervene (which Applicants opposed), and filed comments requesting that the draft decision expand its regulation of DSL. CISPA, a party to the proceeding, filed similar comments.
DRA renews its arguments that the merger should be subject to a § 854(b) review and that mitigation measures are needed to protect the disabled community.
ORA renews its earlier arguments that the transaction should be subject to § 854(b) and that reliance on the AG's Opinion is misplaced. TURN further argues that evidentiary hearings are needed.
TURN similarly argues that exempting the transaction from § 854 (b) constitutes legal error and that evidentiary hearings are needed. TURN further alleges that the draft decision has ignored TURN's evidence, and that under §853(b) the Commission can award benefits, thereby making TURN's analysis of benefits critical. Finally, TURN argues that the draft decision errs in failing to adopt its merger conditions.
11.2. Discussion
We find the Applicants' request that this Commission conform its DSL requirement to that of the FCC to be premature at this time, particularly since the final order of the FCC is not yet available. When the FCC's order is available, Applicants may bring this before the Commission through a petition for modification. In addition, as the discussion in this decision makes clear, this condition is necessary to ensure that the intermodal competition will remain viable.
Concerning Pac-West's request for non-discriminatory interconnection of packet networks, we note that Verizon does not dispute that its ILEC must provide non-discriminatory interconnection of packet networks. We see no reason, however, to extend this condition to other subsidiaries of the merged entity.
Qwest's argument that we have ignored substantial evidence in this record is wrong. We have revised this draft to make clear that we have considered the evidence that Qwest has offered, but found it unpersuasive, particularly when compared to the analysis provided in the AG's Opinion and to the evidence provided by the Applicants. In particular, we have revised the
Concerning CALTEL's request that the Commission open a rulemaking proceeding to establish price caps for wholesale services, we do not see any adverse consequences from this merger that would necessitate such a set and we decline to do so at this time.
Concerning Cox's argument that the draft decision failed to consider its proposals, we have expanded our discussion to make clear that we have rejected its conditions as unmerited and unjustified by any plausible adverse consequences from the merger.
Concerning Earthlink, we grant its motion to intervene in order to ensure a full record. However, we decline to adopt the conditions proposed by Earthlink and CISPA to regulate DSL for we see no specific adverse consequence that would warrant such an expansion of regulation.
The arguments of DRA and ORA add nothing that was not already covered in their briefs, and we do not address their points in detail.
TURN also follows the arguments of its briefs in the main part, but raises an new issue, that § 853(b) requires exactly the same analysis of merger benefits as required under § 854(b), and that the draft decision has ignored factual evidence in the record. In both these points, TURN errs. Section 853 (b) permits only requires that we determine that a proposed transaction is in the public interest, not a dollar-by-dollar assessment and enumeration of total of benefits. This draft has examined the evidence provided by TURN, but finds that the evidence provides nothing of value in our determination that the transaction is in the public interest, and that much of its elaborate methodology and analysis is rendered moot by our decision not to apply § 854 to the transaction. In addition, TURN's HHI analysis depends entirely on its definition of the market, and it finds that AG's Opinion, which does not rely on an HHI analysis to be "misguided." As noted in the discussion above, we have found the AG's Opinion more consistent with standard economic analysis and more appropriate for the analysis of this market. Our rejection of TURN's argument stems not from a failure to review its evidence, but from a decision that finds the evidence weak and the analysis faulty.
292 See Pub. Util. Code § 311(g), and Rule 77.
