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Qwest Communications to Merge with CenturyLink

in Broadband Updates/Broadband's Impact/FCC/States/Universal Service by

WASHINGTON, April 23, 2010 - Qwest Communications has announced a merger with CenturyLink.

The new firm will span 37 states with 5 million broadband customers, 850,000 wireless consumers and 17 million access lines. The new firm will maintain the CenturyLink name and maintain prominent visibility in the Midwest and the South.

While both firms maintain a broadband business, their core competence is traditional phone service. Prior to the merger CenturyLink was the fourth largest telephone exchange with more than 7 million access lines; Qwest also was a major telephone exchange network with 10 million access lines across 14 states.

This merger of these traditional phone providers may be the harbinger of things to come. The Federal Communications Commission has made it clear that is has decided to shift priorities from telephone to broadband services. While both firms maintain broadband services, their use of digital subscriber line technology is not as popular compared to high-speed cable and fiber, which is provided by its competitors.

Qwest is one of the few firms in the United States that offers VDLS2 across 10 states, providing 40 megabits per second download and 20 mbps upload speed.

Before CenturyLink agreed to acquire Qwest, CenturyLink had intentions of upgrading its network by the end of the year. Additionally, Qwest maintains a very large fiber network that already cuts across most of CenturyLink’s current footprint.

Both firms are major receivers of Universal Service Fund money. In 2009, Qwest received $65,325,697 while CenturyLink received $59,410,988 from the fund.

If the new CenturyLink will continue to get funds from the USF, it will have to expand its broadband business. The combined company currently will have a 173,000-mile fiber network.

The FCC already has supported the shift in policy from voice to broadband. In the press statement released by the firms, the current CenturyLink CEO comments on this new broadband focus: “We believe the combination of CenturyLink’s and Qwest’s employees, assets and service areas will provide us greater scale, scope and expertise and will provide significant benefits for shareholders, customers and our communities. This combination will enhance our ability to deploy innovative IP products and high-bandwidth services to business customers, expand broadband availability and speed to consumers, and offer superior, differentiated video products.”

Rahul Gaitonde has been writing for since the fall of 2009, and in May of 2010 he became Deputy Editor. He was a fellow at George Mason University’s Long Term Governance Project, a researcher at the International Center for Applied Studies in Information Technology and worked at the National Telecommunications and Information Administration. He holds a Masters of Public Policy from George Mason University, where his research focused on the economic and social benefits of broadband expansion. He has written extensively about Universal Service Fund reform, the Broadband Technology Opportunities Program and the Broadband Data Improvement Act

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