By PETER SVENSSON
The Associated Press
Friday, March 18, 2011; 6:06 PM
NEW YORK -- Federal regulators on Friday approved CenturyLink Inc.'s acquisition of Qwest Communications International Inc., on the condition that the combined phone company provide cheap broadband Internet access and computers to poor households.
The deal will unite the third-largest and fourth-largest traditional phone companies in the U.S., behind AT&T Inc. and Verizon Communications Inc. The combination will offer local-phone service in parts of 37 states.
Friday's approval by the Federal Communications Commission was the final regulatory hurdle for the $12.2 billion deal, which is now set to close on April 1.
To get FCC approval, Monroe, La.-based CenturyLink is promising to offer low-income households computers for $150 and broadband starting at $10 per month for the first year after the merger. The minimum price will then rise to $15.
Households will be able to qualify for the deal a number of ways, including by income level or participation in Medicaid or school lunch programs.
The FCC expects 2 million to 2.3 million households to qualify for the discounts. CenturyLink is committing to actively marketing them and providing training in computer use.
"This program holistically tackles the principal barriers to broadband adoption," said FCC chairman Julius Genachowski.
The FCC applied a similar condition to cable company Comcast Corp.'s acquisition of NBC Universal.
CenturyLink is also committing to doubling the number of homes and businesses that can get fast broadband, with speeds of 12 megabits per second or more, in Denver-based Qwest's service area, and tripling the number that can get ultrafast speeds of 40 megabits or more.
Phone companies like Qwest and CenturyLink have seen cable companies snag most new cable customers, since they're having trouble matching their download speeds. Together, the combined company will have about 5.3 million broadband subscribers, making it the fifth-largest provider of fixed-line Internet access in the country.
CenturyLink's shares rose $1.02, or 2.5 percent, to end Friday at $41.83. Qwest added 15 cents, or 2.2 percent, to $6.93.