The Federal Communications Commission released details of its approval of Verizon Wireless’ acquisition of Alltel Communications L.L.C., including the five additional markets that need to be divested. The ball is now in Verizon Wireless’ court to close on the deal that will propel the carrier past AT&T Mobility as the industry’s largest operator.
According to the FCC documents, 218 markets were flagged as potentially becoming less competitive following Verizon Wireless’ acquisition of Alltel, including the 85 markets Verizon Wireless originally said it would divest in order to win approval for the deal. Verizon Wireless eventually added 15 more markets that it would divest.
Following further analysis, the FCC trimmed its list of required divestitures to 105 markets, adding Lyon, Iowa; Johnson, Tenn.; Muskegon, Manistee and Newaygo, Mich., to Verizon Wireless’ 100 markets.
The FCC said Verizon Wireless would have 120 days following the close of the deal to divest the markets. The divestitures are to include spectrum, network assets and customers. Unlike past divestitures, Verizon Wireless will have to include all spectrum held in the flagged markets, including 1.9 GHz spectrum and the AWS-1 1.7/2.1 GHz spectrum.
Everything must go
“Everything goes with the market. They will not become integrated with Verizon Wireless,” said Verizon Wireless spokeswoman Robin Nicol. “But a customer can make a personal decision whether they want to change carriers. Nobody is imprisoned with a wireless carrier.”
Nicol’s comments hint that while Verizon Wireless will have to give up any customers still on Alltel’s network following a sale, the carrier is looking at wooing potential subscribers to Verizon Wireless. Complicating the process could be Verizon Wireless’ decision as to which Alltel offerings it plans to keep, including its popular MyCircle plans. Nicol declined to comment on any rate plan integrations prior to the deals final closing. However, both carriers said that prepaid customers will benefit because they won’t have to re-enter their called number when roaming from the one network to the other, which is the current method for both companies.
The FCC did not put conditions on the divestitures, but did recommend that the Verizon Wireless consider regional, local and rural providers when choosing a buyer. The carrier did say there will be store closings and job cuts, but provided no specifics.
The list of potential buyers for the markets is limited as past acquirers of divested markets have themselves been acquired. The most likely buyers would be CDMA carriers looking to expand their rural footprint, such as a U.S. Cellular Corp. or other regional players.
Network integration is expected to be straight forward. Verizon Wireless said it plans to upgrade Alltel’s current CDMA2000 1x EV-DO Revision 0 network assets, which currently cover 76% of its potential customers, to the higher-speed Revision A standard within one year of the deal’s closing. Verizon Wireless expects to finish CDMA network integration within 18-24 months after the close and will move forward with plans to launch Long Term Evolution technology in its network and in Alltel service areas. Verizon Wireless said it expects LTE deployment going a bit quicker in rural areas as it will be able to utilize Alltel’s existing infrastructure.
The FCC ruling also held Verizon Wireless to its offer to continue operating Alltel’s GSM network that is used to provide roaming services. However, Verizon Wireless said it had no plans to expand the GSM network’s current coverage area, nor was it bound to upgrade the network beyond its current 2G technology. This decision could leave roaming partners short on 3G coverage.
