WASHINGTON-The Federal Communications Commission last week asked Sprint Corp. and Nextel Communications Inc. to supply additional information on their proposed $35 billion merger, but the latest government request for data does not appear to signal the deal is in trouble.
Indeed, Sprint espoused the view that follow-up questions are a normal part of the process and took heart in the timing and structure of the FCC request for more documentation and explanation.
“We’re pleased the questions came this early in the process because it indicates the [merger] process is on pace; things are going well,” said James Fisher, a Sprint spokesman.
Nextel spokeswoman Leigh Horner agreed, saying the FCC’s questions are in line with the agency’s normal routine of merger review.
The marriage of No. 3 Sprint PCS and No. 5 Nextel would still keep the combined wireless company behind No.2 Verizon Wireless and No. 1 Cingular Wireless L.L.C. The proposed Sprint-Nextel merger is the latest major wireless transaction since the federal government approved Cingular’s $41 billion acquisition of AT&T Wireless Services Inc. last year. The latter deal required selling some wireless properties as prerequisites for approval.
The FCC and the Justice Department are expected to approve the Sprint-Nextel combination later this year. The only question appears to be whether any strings will be attached to the U.S. government’s consent.
Nevertheless, questions in the FCC’s 12-page letter indicate federal regulators are not satisfied with the level of detail supplied by Sprint and Nextel in their merger applications.
“In order for the commission to complete its review of the applications and make the necessary public interest findings under section 310(d) of the Communications Act, we require additional information and clarification of certain matters discussed in the applications. If necessary, we will follow up with additional requests for information,” said Scott Delacourt, deputy chief of the Wireless Telecommunications Bureau, in an April 29 letter to Sprint and Nextel.
FCC Chairman Kevin Martin has yet to appoint a wireless policy chief.
The FCC letter seeks greater explanation on a broad range of issues regarding the transaction’s potential impact on the 2.5 GHz broadband wireless market, mobile-phone prices, service quality, roaming, push-to-talk, cell-site consolidation and safety-related government mandate compliance.
Delacourt asked for answers to questions by May 20 and requested each carrier respond separately to the questions.
Previously, the wireless bureau informally asked Sprint and Nextel for more information on their 2.5 GHz wireless broadband licenses and leases, which combined would form a national footprint. The two carriers responded by reiterating that their 2.5 GHz holdings would not give the merged entity market power in the band, revamped by federal regulators last year to foster high-speed wireless Internet services.
Of the nearly 30 merger questions (some multifaceted) asked by the FCC, only a handful focused on the 2.5 GHz issue, and those questions were toward the end of the letter.
Consumer groups and a group representing local technology centers have urged the FCC to require Sprint and Nextel to divest 2.5 GHz interests in certain markets as a condition for merger approval.
The FCC asked Nextel to explain-why in the absence of the merger-it would not move forward to exploit broadband wireless frequencies. The agency also asked how the merged wireless carrier would develop the 2.5 GHz band and inquired when it would offer service in the combined service area.
But the queries suggest the FCC is taking a broader view of the proposed merger just as it did in its evaluation of the then-proposed Cingular-AT&T Wireless deal. Specifically, the FCC is scrutinizing the proposed Sprint-Nextel merger to ascertain what it might mean for consumers, competition and the ability of the merged entity’s to comply with key federal mandates.
