The list grows of who wants the FCC and other government regulatory agencies to block the merger between Verizon Wireless and Alltel: AT&T, Rural Cellular Association*, International Brotherhood Electrical Workers, Leap Wireless, and consumer advocacy groups to name a few. Moreover, the reasons why the stakeholders don't want the merger to go through range incredible:
- Leap Wireless, Centennial Communications and other groups for their roaming contracts with Alltel Wireless. Although, this hurdle is easily over-thrown since Verizon has clearly stated they will continue to abide by Alltel's roaming contracts and the FCC has the authority – and current political momentum – to pass roaming regulations.
- AT&T Wireless is upset mainly because they will be over-thrown as the largest cellular coverage for any one provider. Moreover, the technology Verizon Wireless and Alltel currently use, CDMA, is superior compared to GSM (i.e. analog, not digital). If the merger goes through AT&T will have more dropped calls and less of a network coverage area then Verizon Wireless – a huge market value. Furthermore, with the contract of Apple's iPhone expiring in 2010 AT&T's fears start to increase expidentionally.
- Some consumer advocates, such as the Consumers Union, which believe having an even larger market share would make it harder for cell phone manufacturers to disregard exclusive contracts.
- Sprint, you will not find on the list due to the popular Sprint-Clearwire merger; nor will you find T-mobile on the list either due to their head-hunting for weak companies to buy assets from, or possible mergers of their own; although, it could be debated that the possibilities of further mergers being approved by the FCC decrease substantially if the Verizon-Alltel merger is approved.
- Various other organizations, such as the Women Impacting Public Policy and the Pacific Research Institute for Public Policy believe the merger would be beneficial for all persons to get access to the wireless Internet and increase new Internet technologies for faster download speeds.
Alltel has more than 13 million wireless subscribers in 34 states – most importantly, including 57 primarily rural markets not served by Verizon Wireless. Verizon Wireless currently has 67.2 million subscribers – if the merger is granted they will surpass AT&T's 71.4 million customers. Stanford Group Co. in a research note that the swift passage of the merger is crucial due to the shift to Democratic control; although, they commented as the timeline as “tight” they agree it's doable.
The main obstacle from a political perspective is Republic Commissioner Deborah Tate which must leave the FCC at the end of the current session of Congress if the Senate does not confirm her to another term. If she is forced-out the Commission will be split on a 2-2 vote leaving a deal breaker on the table. Although, the Democrats would be (and probably are) wiser to push for the merger, using it as a bargaining chip to require net neutralities, open devices (i.e. universal cell phones such that are in Europe) and consumer protection requirements.
However, Gig Sohn, President of Public Knowledge, makes a valid point: Sprint being in a weakened position and Verizon Wireless controlling 80 million subscriber accounts out of the 260 million wireless subscribers in existence will leave consumers with fewer choices. The merger would leave Verizon Wireless with 31% of the market, AT&T with 27%, Sprint-Nextel with 21% and T-mobile with 11%.
Here are list of recent quotes by various research organizations:
- Medley Global Advisors LLC said it best, “While it is almost certain the deal will be approved, the company will likely be forced to divest overlapping markets that could range from 20-30% of Alltel's POPs.”
- UBS Securities LLC said, “We expect Verizon Wireless to try to expedite the transaction given that an Obama administration would likely create higher hurdles.”
- Goldman Sachs said, further cellular market consolidations “could force others” such as Sprint-Nextel and T-mobile to structure a strategic combination.
*Sound-Science Wireless, LLC is listed in RCA's Buyer's Guide. Views and Opinions of RCA are their own. (http://rca.officialbuyersguide.net/Listing.asp?Show=All&page=6)