VZW could give up 15% of Alltel customers through proposed merger
Divestitures could include 85 markets in 18 states
July 23 2008 - 1:40 pm ET | Jeffrey Silva | RCR Wireless News
Verizon Wireless, positioning itself to regain the top spot in the mobile-phone industry, agreed to initial divestiture requirements by the Department of Justice and offered roaming concessions in hopes of winning government approval of its proposed $28 billion purchase of Alltel Communications L.L.C. But it remains unclear whether the No. 2 wireless provider will have to take additional steps to seal the deal before year’s end, when Republicans at the Federal Communications Commission could lose their majority edge with the possible departure of Republican Commissioner Deborah Taylor Tate.
In a new FCC filing, Verizon Wireless informed the agency it had consented to sell wireless properties in 85 cellular markets in 18 states to satisfy antitrust concerns after early discussions with DoJ. Verizon Wireless said the markets — mostly rural service areas — encompass wireless assets that overlap with those of Alltel throughout North Dakota and South Dakota as well certain areas in California, Colorado, Georgia, Idaho, Illinois, Kansas, Minnesota, Montana, Nevada, New Mexico, North Carolina, Ohio, South Carolina, Utah, Virginia and Wyoming.
The divestitures represent about 15% of Alltel’s 13 million subscribers, according to analysts at Stifel, Nicolaus & Co. They said possible candidates for those wireless assets include AT&T Mobility, Leap Wireless International Inc., MetroPCS Communications Inc. and rural carriers.
Even with the divestitures and roaming provisions it could be tricky getting the Verizon Wireless-Alltel deal through the FCC before next year, when a new administration and Congress will be in place.
“The major risk factor, in our view, is timing at the FCC, which, depending on the relative focus and aggressiveness of lobbying, will likely consider additional conditions related to roaming, special access or ‘open access,’” stated Stifel analysts. “In a move designed to anticipate the roaming issue, Verizon yesterday made two commitments to the FCC to maintain the terms of existing roaming agreements with Alltel. The possible departure of Commissioner Tate at the end of the year would create a 2-2 deadlock, which puts a premium on timely FCC review.”
Verizon Wireless announced the Alltel acquisition last month. Public comments on the transaction, which if approved would enable Verizon Wireless to surpass AT&T Mobility as the nation’s largest cellular carrier, are due July 25 at the FCC. Meantime, the FCC is scheduled to rule Aug. 1 on Verizon Wireless’ $2.67 billion play for Rural Cellular Corp.
The combination of the two acquisitions and Verizon Wireless’ big spectrum winnings at the 700 MHz auction earlier this year has prompted competitive concerns among key Democrats in Congress and roaming angst among lawmakers and small, medium and large carriers.
Moreover, a group of rural wireless providers recently petitioned the FCC to reinstate the spectrum cap, which was axed by the FCC in 2003.
Verizon Wireless and Alltel, both CDMA operators, pledged in their merger applications to honor existing CDMA and GSM roaming agreements with wireless providers.
Verizon Wireless went further in its latest FCC submission, offering two commitments upon the closing of the deal.
“First, each regional, small and/or rural carrier that has a roaming agreement with Alltel will have the option to keep the rates set forth in that roaming agreement in force for the full term of the agreement, notwithstanding any change of control or termination for convenience provisions that would give Verizon Wireless the right to accelerate the termination of such agreement,” the carrier told the FCC. “Second, each such regional, small and/or rural carrier that currently has roaming agreements with both Alltel and Verizon Wireless will have the option to select either agreement to govern all roaming traffic between it and post-merger Verizon Wireless.”
However, Leap raised some concerns about the move.
“Verizon’s commitment to honor either Verizon’s or Alltel’s existing agreement to govern roaming traffic for the full term of the agreement is like a man telling his new wife that next month he has the right to date another woman," said Laurie Itkin, director of government affairs at Leap. "Verizon’s commitment fails to mention the fact that many roaming agreements have a 30-day right to termination by either party. Furthermore, this commitment does not move the ball forward even one inch on the issues of importance to non-nationwide carriers: eliminating the in-market exception and including data in the automatic roaming obligation.”
August 14, 2008 06:16 am
Alltel customers will be switched to Verizon as a carrier when the purchase goes through and most likely lose Alltel's benefits. My circle not an option with Verizon. That's a minute saver for those that use only a cell and have no home service. Changing contract at any time without extending the contact out one or two years depending on what you signed up for from the start, Verizon will let you, but occasionally the rep fails to mention you extended it. That goes for features too like text and picture messaging packages, that adds a year or two just by adding the feature, they extend you out for that too. As long as your equipment is working you will probably be able to keep your service part of the agreement, how many minutes for so much a month. Once that goes, your at Verizon's mercy, they may even make you switch to their equipment for compatability with their network, then you will have to switch to one of their plans/contracts. That's part of the things that happen when one cell company takes over another and their customers just have to accept it. The REAL DOWN side, losing a choice.
July 28, 2008 01:10 pm
Wow, this spin off could really suck. Being from a South Dakota city with just alltel and verizon, I'm sure Ill be one getting screwed since my contract is based there, even though I live in Minneapolis 80% of the year. So I won't have an option but to be shoved into a shitty rural carrier instead of Verizon? Looks like I'm screwed...
July 27, 2008 04:08 pm
if you think changing your rate plan will improve your reception frankly you're the type of idiot that ETF's prey on
July 27, 2008 06:02 am
It's a matter of where you live, I just moved to maryland from maine I had ATT and now I have changed to Verizon due to the dead spots. The price is equal to ATT for the service given. As everyone will always b*t*h about how much it costs, stop going over you limits, and cancel the extras that are not needed...
July 26, 2008 05:59 am
Your cell phone reception is a matter of what type of equipment you are using and the quality of the cell network in the area you are using it in. In my part of the country, Alltel / Verizon / Sprint CDMA coverage is vastly superior to the GSM network that AT&T / T-mobile is using. I wiss miss Alltel's innovative features and lower cost per month (compared to Verizon), but I am happy that we'll have access to newer equipment and a VERY large mobile to mobile network.
July 24, 2008 10:00 pm
i did a 2 year contract with verizon. the reception SUCKS. when we renewed, the bill jumped from $230 a month for 5 lines to $410 on the new nationwide plan. and the reception still SUCKS. i'm not the only person they pulled this crap on. we have had att for 4 months and have 4 to 5 bars of signal and yet to drop a call for $200. be wary alltel subscribers. CAN YOU HEAR ME NOW? not with verizon!
July 25, 2008 04:01 pm
In my previous paragraph one of the lines was supposed to say.If you don't like the cost don't have a cell phone nobody is forcing you and if you run your business and have to have cell phones then I guess it is worth the money because you would be broke with out a job if YOU DIDN'T have a cell, so quite complaining about costs.
July 25, 2008 05:59 am
All I see in the above is boo hoo my bill went up and I want it all and not have to pay for it. Phones are what connect everybody together and it costs Billions to do, so naturally the more you want from a Wireless company the more it will cost. I know people that make there living off of their cell phones and complain about what is costs, but then turn around and pay upwardes of $150.00 a month for cable or sat tv and I'm pretty sure you don't make your living watching tv, so I would say you pay more for what you use the most. If you don't like the cost don't have a cell phone nobody is forcing you and if you run your business and have to have cell phones then I guess it is worth the money because you would be broke with out a job if youdid have a cell, so quite complaining about costs. So far everybody is trying to keep up with VZW, as far reception every wireless company has spots where the do better then the rest, and if VZW didn't have to get rid of ground to try to gain ground they would have more in the end, but everybody wants it fair so naturally they have to let other companies exsist. Here in MT if you have anybody but VZW or Alltel, don't plan on using your phone at all as well as ND, SD, WY, WA, ID. I don't think AT&T is any better or worse then VZW. Anyway none of this has anything to do with the article. The fact is VZW should be alowed to buy Alltel, but shouldn't be a monoply across the US. So the Fed needs to keep an eye on them and keep them in check. However they shouldn't be able to cap the amount of frequency any one company has unless they monopolize all frequencies.
July 25, 2008 05:59 am
So I have not been very impressed with the VZW/RCC merger from the beginning. But got good news when I found out that ATT Mobility was buying my market in VT. Verizon has been a problem since they bought Bell Atlantic. My bill went from $65.00 monthly with Bell to 350.00 with verizon. I went to Unicel when I moved to VT and kept a steady bill for the last 6 years!!RCC has always been a solid company with very competitive prices and mid/hi tier phones.Verizon will do nothing more than make false promises,and push the avg. consumer into a rate plan that suits thier commission needs and not the customers needs. The quality of service both on the phones and in the call centers and in the stores is way below what a customer would expect from a company that says they have the nations #1 network.
July 24, 2008 10:00 pm
Actually, I kinda like Verizon. In the South, at least along the I-10 corridor, the reception's pretty good.Given recent telecom developments, can someone tell me again why they broke up Ma Bell? can you say "natural monopoly"?