Windstream is concerned that CenturyLink’s pending acquisition of Level 3 could create a larger carrier that will use its broader market power to engage in unfair billing and payment practices that could hinder Windstream's rural broadband expansion efforts.
Echoing a similar concern made by fellow telco Frontier Communications, Windstream said in an FCC filing (PDF) that has found Level 3 has either been refusing to pay or delaying payment for what it says is millions of dollars in wholesale services. Windstream added that it has received a large number of “rate increase notices from Level 3 that are inconsistent with the company’s past practices.”
Windstream is worried that when CenturyLink completes its acquisition of Level 3 later this year, the new company's billing practices could inhibit Windstream's rural broadband expansion efforts.
“Like Frontier, Windstream is concerned that the combined entity will use its augmented scale and market power to engage increasingly in these and other practices that are contrary to the public interest and fair and reasonable competition, and are detrimental to Windstream’s continued effort to invest in its network to provide robust and affordable broadband service, particularly in rural and high-cost areas,” Windstream said.
In particular, Windstream said it has found that Level 3 disputes bills more frequently, and that when Level 3 evaluates and rejects what it says is a “meritless” billing, the transport provider will delay payment.
According to Windstream, after requesting a new review of a billing dispute, Level 3 won’t provide additional supporting documentation to back up its claims. Additionally, Windstream said that Level 3 will repeatedly ask the same clarifying questions in similar disputes, and that Level 3 continues to withhold payment on resolved disputes.
“In short, it appears to be a standard business practice of Level 3 to dispute bills and delay payment, holding on to the cash as long as possible to attain cash flow guidance targets provided to investors and analysts,” Windstream said.
Another issue is the rate Windstream pays Level 3 for backbone transmission and long-haul transport to serve its business customers outside of its traditional wireline footprint.
“While these increases may not be against the terms of the contract, they are inconsistent with Level 3’s past practice, which has been to continue billing at the term contract rates as long as the circuit is in service,” Windstream said. “Carriers typically modify special access tariffs annually to reflect changes to TDM input rates, and these changes typically include both rate increases and decreases.”
Since Level 3 announced its merger with CenturyLink, Windstream has seen Level 3 improve some of its billing practices, but it is concerned that the service provider’s adherence to fair and best practices will not continue voluntarily if the FCC approves the deal without conditions.
At the same time, Windstream added that it does not have concerns with CenturyLink’s bill payment practices.
However, Windstream added that it “is concerned that the combined company, which will have greater scale and increased market power, will assume the more problematic practices of Level 3.”
The service provider said that the FCC should impose a requirement that Level 3, and the new company created out of the acquisition, will follow a fair billing process.
“Windstream agrees with Frontier that the Commission should adopt conditions to ensure that ensure that Level 3 and the combined entity cannot engage in unreasonable bill payment practices,” Windstream said. “In addition, the Commission should adopt conditions to prevent Level 3 and the combined entity from using their market power in the business data services market to engage in extortionate price increases.”