FCC Approves Alltel-Western Wireless Merger with Conditions
The FCC Mon. approved Alltel’s acquisition of Western Wireless, but imposed conditions aimed at ensuring the merger doesn’t stymie competition. The agency said Alltel will have to divest Western Wireless business units, including customers, infrastructure and cellular spectrum, in 16 markets. The Justice Dept. last week approved the merger conditional on divestiture of assets in the same 16 markets. The FCC also imposed a condition to assure adequate roaming.
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The Commission said it determined, after extensive analysis, that “the likely public interest benefits of the merger outweigh the potential public interest harms.” The acquisition won’t harm competition in most markets, the FCC said in a news release: “The Commission analyzed many factors regarding the likely horizontal effects of the merger, including substitutability of products and services, possible competitive responses by rival carriers, spectrum aggregation, deployment of advanced wireless services, network effects on the merged company and penetration rates in local markets.”
The conclusion was “anti-competitive effects are unlikely in all but 16 of the FCC’s 734 Cellular Market Areas (CMAs).” The markets to be divested include one in Ark., 6 in Kan., 9 in Neb. Alltel will have to appoint a trustee to manage the asset divestitures until they're sold. The company must start the transfer process within 3 days after the order is effective by filing a transfer application with the FCC. The assets then must be transferred to the trustee 3 days after the Wireless Bureau approves the applications.
The roaming condition says Alltel can’t “prevent its subscribers from reaching another carrier and completing calls via manual roaming, unless specifically requested to do so by subscribers.” The FCC said it also plans to open a rulemaking soon to deal with other roaming issues raised in the Alltel proceeding. The question will be whether rules “should be modified to take into account current market conditions and developments in technology.”
FCC Comr. Copps said FCC data show the “merger will likely leave an acceptable level of wireless market competition in most affected geographic areas.” He said the 2 companies’ networks overlap in only 27 markets and the FCC required divestiture in 60% of those. He said he is concerned that in a few areas the market shares of remaining competitors are small compared to the merged company. However, smaller carriers appear to have “spectrum resources and build-out facilities” that would let them take customers from the merged company.
Copps said he is concerned that the 2 companies may not meet a Dec. 31 deadline for complying with the “Phase 2” deadline for wireless deployment of location-based E- 911 technology. He said the order states that if the merged company fails to meet the E-911 requirement, the FCC “will not hesitate to take enforcement action.” Copps said the agency should have gone further. Comr. Abernathy said she understands the concerns about E-911 compliance but “I do not believe that such concerns are specific to this transaction.” CTIA last week asked the FCC to ease the deadline that would require wireless carriers to make 95% of handsets location-capable by Dec. 31 (CD July 5 p1).
Comr. Adelstein said he is particularly concerned about roaming and pleased that the agency voted to open a proceeding: “During the past year, we have regularly heard from smaller mobile wireless companies that are concerned about their ability to negotiate automatic roaming contracts with the larger regional and nationwide carriers… I think the time is right for the Commission to accumulate a full record on the roaming issue to determine what, if any, action may be needed.”
Medley Global Advisors said the $6 billion deal is the least controversial pending merger and the conditions could be termed “minimal.”