FCC Approves GCI’s Purchase of Alaska DigiTel
The FCC approved GCI’s acquisition of Alaska DigiTel despite charges by competitors MTA Wireless and ACS Wireless that the deal could hurt wireless competition in the state. MTA and ACS had been interested in 20 MHz of spectrum that they contend GCI has warehoused, so they could offer statewide service, sources said. MTA and ACS are considering appealing or asking the Commission to reconsider the order.
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The Alaska wireless case had given commissioners complicated commercial relationships to unravel. GCI, the state’s largest wireless carrier, early this year had announced 2 steps that would solidify its position in Alaska. First, GCI said it would reassert control of Denali, which GCI had spun off as a separate company. Second, GCI announced, it planned to acquire rival carrier DigiTel, the only other carrier in the state with a statewide license.
MTA and ACS also had raised questions about GCI’s relationship with Dobson, which owns 3 regional licenses, giving it a statewide footprint. GCI resells Dobson service and has leased to Dobson 10 MHz of the spectrum it uses to offer service in Alaska. The questions raised by MTA and ACS forced the FCC to look more closely at the Dobson-GCI relationship.
“Under Commission precedent, we generally limit our competitive analysis to facilities-based carriers, either nationwide or regional, excluding MVNOs and resellers from consideration when computing initial concentration measures,” the FCC said: “After review of the Resale Agreement, we do not find that GCI should be considered the competitive equivalent of a facilities-based carrier. For purposes of this transaction, consistent with Commission precedent, we exclude GCI’s subscribers from the combined entity’s total when computing initial measures of market concentration.”
As a result, the FCC declined to count as part of GCI’s holdings 55 MHz of spectrum held by Dobson. The FCC said that after the merger GCI will control 60 MHz of spectrum statewide and 80 MHz of spectrum on St. Paul Island. The agency concluded the holdings it’s counting shouldn’t lead to competitive harm and it didn’t require sale of any of this spectrum.
But the FCC did prohibit GCI and Dobson from sharing nonpublic information that would give either a competitive advantage, and required them to adopt other controls to guarantee they would continue to compete for customers. Comrs. Adelstein and Copps “concurred” in a vote on the order, citing their concerns about the working relationships between the Alaska carriers.
“This is a surprisingly complicated set of assignment and transfer of control applications,” Adelstein said in a statement. “I cannot recall a transaction that implicates so many of the major communications providers in a market because of a variety of existing overlapping business arrangements and ventures… It feels like we are leaving a stone unturned here -- that there is more to the transaction that meets the eye.”
“For me, this particular transaction was a close call. There are benefits to this proposed transaction, specifically in making Alaska DigiTel a stronger competitor,” Copps said: “At the same time, as the order points out, there is a real potential for post-transaction coordinated interaction among the applicants and through contracts with third parties.”