Planned AT&T Buy of Centennial Could Show Changing Merger Policies
The Rural Cellular Association, Cincinnati Bell Wireless, Sprint Nextel and other small carriers raised concerns about AT&T’s proposed acquisition of rural carrier Centennial. The merger is small by most standards, adding another 1.1 million customers to AT&T’s 75 million. But it will offer the new FCC under Democrat control a first chance to weigh in on wireless industry concentration and signal whether merger policy will change under a new regime.
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“Because this is the first wireless merger that will be considered by the Democratically controlled FCC, it will be interesting to see, for example, whether the commission will condition the deal on roaming conditions that are more stringent than the roaming conditions imposed in the Verizon Wireless-Alltel transaction,” said an attorney advocating merger approval only with a series of conditions. “This commission appears more likely to recognize and react to the potential harms caused by the continuing consolidation in the industry.”
“How they handle this will provide an early view of how the new FCC will look at competition in wireless - are they going to go back to a cap of some sort,” said a wireless industry attorney. “It’s a small merger, but I'm sure it'll be watched closely.”
RCA said AT&T’s acquisition of the smaller carrier, with customers in Indiana, Louisiana, Michigan, Mississippi, Ohio, Texas, Puerto Rico, and the U.S. Virgin Islands, must be permitted only with requirements that AT&T divest spectrum that would give it more than 95 MHz in any market, or both cellular licenses. The FCC also should “extend and expand the duration and scope of all roaming agreements” entered into by AT&T or Centennial and offer interoperability when another carrier “makes a reasonable request and can be technologically compatible.” RCA also asked the FCC to require AT&T to stop signing exclusive agreements with handset manufacturers “that inherently lessen competition.”
Cincinnati Bell Wireless called for conditions requiring AT&T to honor Centennial contracts for voice and data roaming for an additional seven years. “AT&T, which has progressively acquired a number of its smaller competitors in the GSM segment of the market, has taken the next step in this march of consolidation by proposing to acquire Centennial,” the carrier said. “Centennial is the last remaining GSM carrier to have an appreciable facility footprint that AT&T does not cover, and so it is the last GSM roaming partner with which AT&T has had to deal from a position of anything approaching reciprocity,” the company said. If the merger is approved without conditions “AT&T will have a free hand - indeed untrammeled market power - to dictate terms and prices to its remaining roaming partners in a manner that will not increase efficiency, drive innovation or lower costs, but will merely reduce (or even eliminate) its smaller competitors’ ability to compete.”
Sprint, a CDMA-based carrier, raised particular questions about the future of Centennial’s CDMA assets in Puerto Rico and the Virgin Islands. “Sprint believes the Commission must obtain assurances from AT&T regarding the operation of Centennial’s CDMA networks to ensure that access to these networks is maintained or, if AT&T plans to discontinue operation of Centennial’s CDMA networks, that carriers are given sufficient time to develop and implement alternative arrangements,” Sprint said.