Alltel-Verizon Merger Opponents Want More In-Depth Review
Leap Wireless accused Verizon Wireless and Alltel of refusing to answer the many questions Leap has raised about Verizon’s buy of the smaller carrier. The Rural Telecommunications Group called Verizon’s commitment to rural America “disingenuous.” Other small carriers and groups that represent them similarly slammed the $28.1 billion deal now before the FCC, in reply comments filed at the commission.
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Verizon Wireless and Alltel hope to have the deal completed this year with the current commissioners, since they hope they would have support from the three Republican members of the commission - Kevin Martin, Deborah Tate and Robert McDowell. But opponents, who see the deal as reshaping the U.S. telecom landscape because of the effect on roaming, are asking for a lengthy, in-depth review, and asking the commission to take various steps that could push a decision into 2009. Smaller carriers are especially skittish because of Verizon Wireless’s and AT&T’s success in the recently concluded 700 MHz auction, FCC sources agree.
Leap asked the FCC to send Verizon Wireless and Alltel interrogatories and document requests to “elicit the missing information” not provided in response to questions raised by merger opponents. Leap also said the agency should initiate a rulemaking on the proper spectrum screen to be used in examining the merger.
“In its Petition to Deny, Leap raised a number of questions that Verizon and Alltel had not answered in their application -- questions necessary to the evaluation of their proposed, ‘mammoth-producing’ transaction,” Leap said. “Most of these questions remain unanswered in the Applicants’ Opposition. Indeed, many of the doubts expressed by Leap about the public benefits… are heightened or confirmed by the Opposition.”
RTG accused Verizon Wireless of “boldly” claiming that the primary focus of the merger is to bring benefits to rural America through the delivery of new and expanded wireless services: “In most rural markets, Verizon has had ample opportunity to serve rural America and has simply chosen not to or to do so on a very limited basis.”
RTG said the FCC should hold hearings on merger because of “substantial and material questions of fact that must be addressed.” RTG was particularly unhappy with expert testimony Verizon put in the record a few days before a comment deadline. “By sandbagging the parties with this new testimony and information with only a week to respond, the Applicants have sought to game the system and deprive the public of its due process rights under the Administrative Procedure Act,” the group said. RTG said the experts should be subject to cross examination.
The Rural Cellular Association and U.S. Cellular asked the FCC to look more closely at how the merger would give Verizon Wireless control of low-band spectrum in 79 cellular market areas, especially in light of the amount of spectrum it acquired in the 700 MHz auction. “Verizon Wireless… and Alltel do not dispute the technical superiority of Low-Band spectrum, nor do they dispute that competitive advantages attach to 800 MHz cellular spectrum,” RCA said. RCA asked the FCC to find that “placing all 50 MHz of cellular spectrum under Verizon Wireless’ control in 79 CMAs will be exacerbated by its access to between 55 and 65 percent of the 700 MHz spectrum in those same CMAs.”
But a handful of groups endorsed the merger in replies, including Native American Television, Communications Consumers United and Institute for Policy Innovation. The latter group said the FCC should not make policy calls in addressing a merger application. “Special interest groups and supposed ‘consumer’ groups have become adept at using merger reviews as opportunities to further their agendas and achieve their policy goals through the unique and exceptional processes available to them during a merger review,” the institute said. “This is policy making under duress, and these policy concessions inevitably obtain the power of precedent.”
One merger opponent said the FCC decision on the merger looms huge for many smaller carriers worried about losing Alltel as a roaming partner. “The whole environment has changed,” the opponent said. “Mergers need to be reviewed in a new framework. The roaming issue is huge and roaming becomes more important as spectrum consolidation continues.”
An attorney active in the proceeding urged the FCC to seek additional comment after Verizon Wireless agrees to a final list of divestitures. “If the commission processes and grants the applications as they are, without giving an opportunity for another pleading cycle once it is known what licenses Verizon will keep and what ones it will divest, I can see this going to the court of appeals,” the attorney said.