Internet Speed Becomes Focus Of CenturyLink

WITH LITTLE FANFARE, THE, nation's largest rural telecommunications companies was formed on July 1.

That's when CenturyTel Inc. of Monroe, La., and Embarq Corp. of Overland Park, Kan., finalized their merger, creating CenturyLink Inc., based in Monroe, with 7.9 million access lines. CenturyTel was already ahead of Windstream among local exchange carriers in Arkansas - No. 2 to Windstream's No. 3.

The new company has said it plans to launch the CenturyLink brand in most of its markets in 33 states by the end of 2009. Before the merger, CenturyTel had 2 million access lines, and Embarq had 5.9 million lines. That compares to Windstream Corp., which operates in 16 states and has about 3 million lines.

In approving the merger June 25, the Federal Communications Commission imposed a number of conditions.

CenturyLink must offer broadband Internet access service at a minimum download speed of 768 kilobytes per second to 90 percent of its eligible access lines using wireline technology within three years of the transaction's closing date. CenturyLink must use alternative technologies such as wireless broadband for the remaining 10 percent of eligible access lines. And CenturyLink must offer its customers greater Internet speeds.

In Arkansas, the combined company had about 190,000 total access lines and generated revenue of $105 million in 2008, with Embarq contributing only a few thousand dollars in revenue from pay phone services, according to data reported to the Arkansas Public Service Commission and compiled by Arkansas Business.

Windstream serves about 175,000 access lines in Arkansas and generated fiscal 2008 revenue of about $87 million. Despite being of similar size in the state, Windstream does not view the new company as a direct competitor since the two companies' market areas rarely overlap, David Avery, a Windstream spokesman, said.

Cost Savings Seen

The CenturyLink merger is projected to create about $400 million in savings for the new company, according to CenturyLink. The FCC has its doubts about the projected savings, but believes the cash generated by merging CenturyTel and Embarq will ultimately serve customers.

Although "we do not fully accept the Applicants' claim of $400 million in cost savings, [...] we nevertheless find that the merger is likely to result in savings in fixed and marginal costs, some of which are likely to accrue to the benefit of consumers," according to the FCC order.

Customers will experience improvements as the merger produces greater efficiencies, said Jeff Jones, CenturyLink's communications manager for Arkansas, Mississippi and Louisiana.