WASHINGTON-The Justice Department asked the Federal Communications Commission for sensitive numbering information-including local number portability data-from Alltel Corp. and Midwest Wireless Holdings L.L.C. in connection with Alltel’s proposed $1 billion acquisition of Midwest that is being opposed by U.S. Cellular Corp.
While the FCC said it has authority to share information with another government agency, the commission April 17 gave the parties 10 days to oppose giving the Justice Department highly classified carrier-specific numbering resource utilization and forecast information and LNP data otherwise under the jurisdiction of the North American Numbering Plan.
The request for wireless numbering information by the Justice Department, which along with the FCC is scrutinizing the Alltel-Midwest deal, is not necessarily unusual. Justice antitrust lawyers last year sought access to wireless carrier numbering data in their investigation of the ultimately-approved Sprint Corp. acquisition of Nextel Communications Inc. and Alltel’s acquisition of Western Wireless Corp.
At the same time, the Justice Department request could signal its interest in competitive concerns raised by U.S. Cellular and may foreshadow the possibility Alltel and Midwest could be forced to shed some wireless assets as a condition for government approval of the transaction.
The Justice Department required divestitures of wireless licenses as a prerequisite to consenting to the Alltel-Western Wireless deal as well as Cingular Wireless L.L.C. acquisition of AT&T Wireless Services Inc. in late 2004.
“In southern Minnesota, the proposed transaction (between Alltel and Midwest) would combine substantial, competing wireless operations that utilize both the A-side and B-side cellular licenses and substantial amounts of [personal communications services] spectrum,” U.S. Cellular told the FCC earlier this year. “In doing so, this transaction would produce market concentration and spectrum aggregation that far exceed the levels that prompted the commission, as well as the Department of Justice, to intervene in the earlier Alltel-Western Wireless transaction.
In addition, the proposed transaction would reduce by one (and in some areas, reduce to one) the number of potential roaming partners for USCC and other CDMA carriers in southern Minnesota. The commission should investigate this transaction thoroughly, and either deny the subject applications or approve them with divestitures that would protect competition and consumers.”
In the face of carrier consolidation that has reduced to four the number of national mobile operators in the United States., the FCC last August launched a proceeding to reexamine roaming obligations of wireless service providers.
In some counties of southern Minnesota, according to U.S. Cellular, a combined Alltel-Midwest would have spectrum holdings as high as 100 megahertz or more. While the FCC no longer enforces a wireless spectrum cap, the agency gives a hard look to mergers in which total spectrum controlled by carrier in a given market reaches 70 megahertz or more.
While U.S. Cellular challenges the proposed Alltel-Midwest hook-up at the FCC, it also is pursuing litigation against Midwest Wireless Holdings in Delaware Chancery Court to enforce what it claims is its contractual right of first refusal to purchase Midwest Wireless Holdings’ majority interest in Midwest Wireless Communications and to forbid Midwest Wireless Holdings from selling that interest to Alltel.
Alltel and Midwest Holdings predict the proposed merger will further wireless competition generally by strengthening Alltel as a regional carrier insofar as competing against national and other wireless carriers.
The two wireless carriers seeking merger approval said U.S. Cellular has a specific, narrow agenda.
“Properly viewed, the USCC petition attempts to use the commission’s regulatory process not to advance the public interest but to redress USCC’s failed attempt to persuade Midwest to sell Midwest Wireless to USCC,” stated Alltel and Midwest Holdings in an FCC filing. “The commission should reject this tactic and promptly grant the transfer applications.”
Alltel previously said the Midwest Wireless deal includes the latter carrier’s 400,000 wireless customers, network assets, and 850 MHz and 1.9 GHz spectrum licenses covering southern Minnesota, northern and eastern Iowa and western Wisconsin. The two carriers operate CDMA-based networks and rely on Qualcomm Inc.’s BREW platform to deliver content.
Last fall, Midwest Wireless had begun to deploy high-speed wireless data services using CDMA2000 1x EV-DO technology in addition to offering a fixed wireless broadband Internet service in select locations, which the carrier said offers network speeds of up to 768 kilobits per second.
