FCC Approves Verizon’s Alltel Buy with Added Roaming Duties

The Verizon Wireless order requires the company to divest assets in 105 of 218 markets where the companies overlap. Verizon Wireless agreed to extend roaming agreements for four years. That’s two more years than the carrier had agreed to win Justice Department approval last week, but three years less than the seven years commission Democrats sought. Verizon Wireless also agreed to maintain Alltel’s GSM network indefinitely.

Commissioners Michael Copps and Jonathan Adelstein dissented in part and concurred in part with the order, saying they would have preferred the longer roaming extensions. “These conditions are better than nothing and better than what was proposed when they were circulated, but I cannot say they address all my concerns,” Copps said. “I am very concerned that the merger of these two entities will reduce competition in the wireless marketplace,” Adelstein said. “I cannot fully support this merger in the absence of reasonable conditions. Competition is essential to keeping consumer costs down and driving innovation.”

Tate, a key vote on the roaming provisions, said she was satisfied that the roaming provisions agreed to by her colleagues would protect consumers. McDowell said he supported the roaming provisions because they are “limited in scope and merger specific.” But he objected to a condition requiring Verizon Wireless to phase out over five years receipt of universal service funding that Alltel gets, concurring in that part of the order. He said he was concerned the condition was not specific to the deal and could prejudice an eventual commission order broadly overhauling universal service.

Verizon Wireless and Alltel announced the merger in June. Verizon Wireless will pay $5.9 billion and take on an estimated $22.2 billion in debt, most from when Alltel was taken private a year ago. “We look forward to seeing and reviewing the FCC order,” a Verizon Wireless spokesman said. “Approval by the FCC is another critical step in the process of completing this transaction.”

Leap Wireless said it’s not clear how much attention the FCC paid to small carriers’ concerns about the loss of Alltel as a roaming partner. “Based upon Commissioners’ comments at today’s open meeting, it is unclear to what extent Leap’s views were taken into account by the majority of the Commissioners,” the company said. “Leap believes that comprehensive roaming reform must be enacted, and the company will continue to vigorously pursue the elimination of the ‘in-market exception;’ and to advocate the inclusion of data within the automatic roaming regulation.”

The FCC cleared the Sprint Nextel-Clearwire partnership with fewer reservations. “This item is better news because it creates a new competitor in the wireless broadband network,” Copps said, contrasting the deal with the Verizon Wireless-Alltel merger. Copps noted that the companies agreed to open access requirements that go beyond those imposed by the FCC for the 700 MHz C-block. “The commission has closely examined whether this transaction is cause for competitive concern, and has found that no competitive harm would result regarding concentration in the markets that these companies serve,” Adelstein said.

Tate said the new Clearwire could be the “third pipe” the FCC has been searching for to compete in broadband with cable modem and DSL service. “Clearwire will possess the spectrum breadth and depth, technical expertise and financial resources necessary to construct a nationwide wireless broadband network,” McDowell said. “By rationalizing the spectrum holdings of Sprint and Clearwire, the new Clearwire is well poised to create efficiencies, spread the substantial business risks, and raise the financing necessary to deploy a competitive, mobile WiMAX service.”