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Legislative Memo

BILL:

A.2208-C (Brodsky) / S.7263 (Foley)

Support

SUBJECT:

Telecom Service Provider Mergers

 

DATE:

June 14, 2010

 

The Business Council is writing to express its strong opposition to this bill which would seriously undermine the state Public Service Commission's (PSC) authority over telephone company mergers.

This legislation requires the PSC to review and approve telephone company mergers and mandate that a portion of the merger benefits go to ratepayers. The PSC would be required to make extensive and specific findings prior to approving such mergers.  This model would be especially harmful in this fragile economic environment.  Mandating the specific terms under which the PSC must approve such a merger in legislation would limit the authority of the PSC and ignore the reality that each transaction presents different issues. 

New York's public utilities have operated under the same merger and acquisition process since 1964, but the industry has changed tremendously during the past 20 years and the process did not contemplate the existence of broadband or the Internet.  Throughout that time, the New York PSC has exercised its regulatory authority and expertise to examine telephone company mergers, as well as those undertaken by gas and electric utilities, and has approved those transactions it determined were in the public interest, while rejecting those it determined were not.  The bill retains the PSC's oversight function, but essentially dictates the final outcome of any of its findings.

If this legislation is eventually enacted, a strong argument could be made that the Legislature intended to prohibit the PSC from even considering vital criteria in its deliberations. This outcome would be detrimental to the public interest itself.   The PSC has a strong history of extracting merger conditions, but has done so on a case-by-case basis.  The proposed legislation is unnecessary and will likely be harmful not only to the affected telephone companies, but also to consumers and the administrative process in New York.

New York cannot afford to penalize one of the few industries that have worked to revitalize communities and raise the standards for services provided to New York businesses.  It is an industry that has driven broadband innovation and created economic growth even in times of stagnation. 

For these reasons we strongly recommend against  adoption of A.2208-C/S.7263.