The Rural Telecommunications Group trade association, which represents small wireless operators in rural markets, filed a petition asking the Federal Communications Commission to deny Alltel Corp.’s pending acquisition of Western Wireless Corp. RTG cited a lack of information in the acquisition application, potential harm to competition in rural markets and possible anti-competitive roaming practices.
The deal, which was announced earlier this year, would bolster Alltel’s position as the largest regional operator with more than 10 million wireless customers and spectrum licenses covering approximately 50 percent of the nation’s land mass. Alltel would also become one of the largest roaming providers in the country with networks supporting analog, TDMA, CDMA and GSM technologies.
RTG noted in its filing that Alltel and Western Wireless did not provide enough detail about possible spectrum overlap of their combined operations, specifically regarding the ownership of both cellular licenses in a given market. RTG explained that while the FCC recently eliminated the cellular cross-interest rule in favor of a market-by-market evaluation of spectrum ownership, the omission makes it harder to challenge the deal.
“If this were simply an individual market transaction, then such an omission might be understandable, but in light of an FCC merger review, the applicants should be obliged to be forthcoming with all relevant ownership information,” RTG explained.
RTG also claimed that the harm of market concentration on consumers would outweigh any perceived benefits of the deal, and there is no evidence to support Alltel’s claim that the deal will result in the quicker deployment of advanced wireless services. RTG points out that in a number of markets Alltel would hold 70 megahertz of spectrum, which would be more than one-third of the 170 megahertz of spectrum available in those markets.
“Market spectrum is already expensive, but if the transaction is approved, then spectrum in those markets where Alltel holds more than 70 megahertz of the available spectrum will be at even more of a premium,” RTG said.
RTG also argued that Alltel and Western Wireless’ claim that regional and local carriers will continue to be able to offer nationwide coverage was incorrect. RTG cited limitations in technology and frequency bands as a limiting factor for smaller carriers to provide nationwide coverage, as well as Alltel being under no obligation to enter into automatic roaming agreements with smaller operators.
“At a minimum, the commission should condition the proposed merger to require that Alltel allow roaming access to the merged network by all carriers at rates no less favorable than it has been charging [Western Wireless] since the merger was announced,” RTG’s filing pleaded.
The FCC and Department of Justice have already asked for additional information from both Alltel and Western Wireless regarding the proposed acquisition, including spectrum and market concentration information, though most analysts expect the deal to eventually be approved. Alltel said it expects the acquisition to be approved by mid-year.
