PSC Telecom Merger Review (A.3801)

Date: 2017

A.3801 (Dinowitz)

MEMORANDUM IN OPPOSITION

Unshackle Upstate, a non-partisan, pro-taxpayer, pro-economic growth, education and advocacy coalition made up of business and trade organizations from all parts of Upstate New York, opposes this legislation.

This bill would add a new Public Service Law Article 12 that would require the Public Service Commission (PSC) to review and approve any proposed merger or acquisition between telephone corporations, cable corporations, and combination telephone and cable corporations where such companies have gross annual revenues of $100 million or more. It would also require the PSC to ensure any such merger or acquisition “equitably allocates the forecasted positive benefits” between shareholders and subscribers, and it specifically provides that subscribers “shall receive not less than fifty percent of such forecasted positive benefits.”

The sponsors’ justification for this proposal is to ensure that “the public interest is protected” when a merger or acquisition is proposed between telephone corporations, cable corporations, and combination telephone and cable corporations.

Unfortunately, this bill is not in the public’s interest. Instead, it reflects the interest of the Communications Workers of America (CWA), specifically to protecting its members’ jobs.

The inclusion of a requirement that 50% of the benefits of any sale or merger be allocated to “subscribers” is clearly intended as a “poison pill” to prevent a sale or merger. Neither the bill nor the sponsor’s memo explain why customers deserve such a benefit, nor do they explain how these benefits would be allocated or distributed. Earlier versions of this bill would have required subscribers to receive 40% of such benefits.

The latest version of this bill includes yet another requirement -- the creation of a specific program where services for low-income individuals are offered at reasonable rates. While such a requirement may be appropriate in some situations, imposing a statutory mandate as a condition of a merger or acquisition is inappropriate.

The sponsor does not explain why the bill applies only to mergers and acquisitions involving the largest cable and telephone providers. If this measure were truly “in the public interest,” then a higher level of scrutiny and the distribution of benefits to subscribers should apply to all industry mergers and acquisitions -- not only those involving companies that employ CWA members.

We urge the sponsor of this bill to advance “the public interest” by instead working to reduce the state-imposed taxes and fees that make up a significant portion of the typical telephone customer’s bill each month.

The nation’s telecommunication’s markets – which include landline and wireless telephony, VoIP (Voice over Internet Protocol), cable and satellite – are extremely competitive. We cannot regulate telecommunications providers as they are a 1970’s monopoly if we want these industries to thrive and invest in networks in New York in 2017.

For these reasons, Unshackle Upstate opposes the enactment of this legislation.