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Legislative Memo

Johnny Evers
T 518.465.7511
www.bcnys.org

BILL:

A.3801 (Dinowitz)

Support

SUBJECT:

Telecom and Cable Service Provider Mergers

 

DATE:

February 24, 2017

 

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 and cable company mergers.

This legislation requires the PSC to review and approve telephone and cable 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. In addition, this extra oversight is completely unnecessary as various state and federal agencies already exercise oversight over the merger process.

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 and cable 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 and cable companies, but also to consumers and the administrative process in New York. Further, legislation enacted in 2014 already made significant changes to cable mergers, shifting the significant public interest determination burden from the PSC to companies. That recent change obviates the need for this legislation.

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. This legislation would stall telephone and cable company investment and prohibit mergers that benefit customers with enhanced service and network capability.

For these reasons we strongly recommend against adoption of A.3801.