WASHINGTON-The Justice Department said Alltel Corp. must divest wireless assets in Arkansas, Kansas and Nebraska in order to win government approval of its proposed $6 billion purchase of Western Wireless Corp.
Justice last week simultaneously filed a civil suit in federal court here to block the deal and a proposed consent decree agreed to by Alltel that would resolve the antitrust concerns if approved by the court. Justice said the original transaction would have led to higher prices, lower quality and diminished investment in network upgrades in the three rural states.
“Today’s action by the department ensures that consumers of mobile wireless telephone services in these markets will obtain the benefits of competition, including lower prices and higher quality,” said J. Bruce McDonald, deputy assistant attorney general in the Justice Department’s antitrust division. “The required divestitures will preserve competition in particular for residents of rural areas, who often have fewer choices for wireless telephone services.”
Under the terms of the proposed consent decree, Justice said the merged firm must divest Western Wireless’ CDMA-based mobile wireless services business, including spectrum and customers, in nine markets in Nebraska, six markets in Kansas, and one market in Arkansas. The Kansas divestitures would include all of Western Wireless’ operations in the state, while the Nebraska divestitures would include all of Western Wireless’ operations it the state, excluding Lincoln.
Alltel offers its own CDMA-based services using 850 MHz licenses in both Nebraska and Kansas.
The divested Western Wireless operations could prove appealing to Verizon Wireless. The CDMA-based carrier currently offers services in Kansas and Nebraska using 1.9 GHz spectrum, which is seen by many as inferior to the 850 MHz spectrum in covering rural areas due to its lower propagation. Alltel also has an extensive roaming relationship with Verizon Wireless and both carriers have followed similar network technology paths.
Little Rock, Ark.-based Alltel, however, would not be required to divest Western Wireless 1.9 GHz-based assets used solely to provide roaming services in these 16 areas to carriers that use GSM technology. Alltel does not currently offer this service and therefore the proposed acquisition would not lessen competition in providing the service, said the department. Bellevue, Wash.-based Western Wireless has GSM roaming agreements with several operators, including Cingular Wireless L.L.C. and T-Mobile USA Inc.
Alltel is also required to divest the Cellular One service mark under which Western Wireless operates in the 16 divestiture markets. Western Wireless acquired sole ownership of the Cellular One brand from Cingular Wireless L.L.C. subsidiary Southwestern Bell Mobile Systems in 2001, and is currently used by rural carriers in 35 states.
RCR Wireless News Reporter Dan Meyer contributed to this story.
