Public Interest Groups Ask FCC to Block Verizon Wireless Buy of Alltel

“The applicants have failed to meet their burden of demonstrating how the applications, as filed, serve the public interest,” said the Public Interest Spectrum Coalition. “The proposed merger is particularly problematic for consumers as competition amongst facilities-based wireless service providers in many geographic markets is expected to diminish.”

The coalition, like the small carriers, stressed the merger’s potential impact on roaming. “Nonbinding” roaming commitments that Verizon Wireless made last month in a letter to the Justice Department (CD July 28 p1) are “ambiguous and perhaps positively unhelpful,” the coalition said. “The Commission should thoroughly review the ’specific commitments’ made by Verizon Wireless and consider the adoption of merger-specific conditions to ensure that Verizon Wireless does not cut the legs off of rural wireless companies who need strong roaming commitments to ensure their continued survival.”

The coalition asked the FCC to scrutinize a Rural Cellular Association request to ban exclusive distribution contracts between handset makers and wireless carriers. (CD May 21 p1). “The increased market power Verizon will enjoy post-merger will significantly increase its monopsony purchasing power in the handset marketplace, with fewer buyers for phone manufacturers and increased ability for Verizon to dictate ’take it or leave it’ terms to potential vendors,” the coalition said. Members signing the filing are the Consumer Federation of America, Consumers Union, Free Press, the New America Foundation, the Media Access Project and Public Knowledge.

The FCC should approve the merger only if it first requires carriers to offer others roaming for data as well as voice and handles the home-market exclusion in a way amenable to small carriers, Roaming Petitioners said on behalf of regional and small carriers and the Organization for the Promotion and Advancement of Small Telecommunications Companies. (See the separate report in this issue.) “Alltel is a major supplier of both CDMA and GSM roaming and has been much more amenable to reaching reasonable agreements than Verizon Wireless,” the group said. “The result of this merger will be to replace an independent and significant provide of roaming services with an entity that will have significantly less incentive to enter reasonable roaming agreements.”

The National Telecommunications Cooperative Association said the merger would hurt competition in rural America. “The ever-growing large carriers such as Verizon have great market power that is exerted to the detriment of small, rural carriers and their subscribers,” it said.

Wireless is dominated by a few carriers that continue growing, NCTA said. “Since 2001, more than a dozen mergers or acquisitions took place -- several involved small and medium sized carriers who were acquired by larger carriers,” the association said. “The spectrum concentration, while perhaps justifiable on a case-by-case basis, is culminating in ways that are disastrous to rural consumers.” The NTCA also said the merger would be harmful to roaming, since many small carriers depend on Alltel. “If Verizon acquires Alltel, that precarious balance shifts; all other carriers will be forced to depend on Verizon for nationwide access, but Verizon will not be dependent on other carriers,” the association said.

OPASTCO and the Rural Independent Competitive Alliance raised similar concerns about Alltel’s importance to roaming. “The loss of Alltel Wireless as a roaming partner for rural wireless carriers and the increased market power that the post-merger Verizon Wireless will possess could result in rural wireless carriers paying unjust and unreasonable roaming rates that far exceed the costs incurred by Verizon Wireless in providing the service,” the groups said.

The International Brotherhood of Electrical Workers said the deal should be approved only if Verizon Wireless agrees to adopt policies protecting all workers, including contractors’, from radio-frequency exposure. “Verizon routinely powers down their antenna when their employees are in close proximity to… RF transmitters,” the IBEW said. “This safeguard is not provided by Verizon Wireless to our IBEW membership or third-party workers.”

A few commenters endorsed the merger. The Small Business and Entrepreneurship Council called the deal “a positive development for entrepreneurs and small businesses.” The group called the U.S. wireless market highly competitive. “Mergers, particularly in a competitive, dynamic market, can create opportunities for reducing costs and making efficiency gains that benefit customers -- both individuals and businesses -- and to make investments that can improve and enhance products and services,” it said.

The deal will “accelerate the development and adoption of high-speed wireless technologies, opening the door for a new generation of Internet services,” said the libertarian Pacific Research Institute. “By increasing the availability of these technologies, the combination will enhance demand for advanced broadband and spur content providers to offer consumers more choices and lower prices.”