Wireless Merger Threatens Competition, Groups Tell FCC

By Cecilia Kang
Washington Post Staff Writer
Tuesday, October 21, 2008

A coalition of public interest groups has stepped up protests to the Federal Communications Commission over the proposed merger of Verizon Wireless and rural carrier Alltel, saying the deal would be a threat to competition in the cellphone industry.

The Public Interest Spectrum Trust, comprised of six organizations, has balked at an order proposed last week by FCC Chairman Kevin J. Martin to approve the merger, which would create the nation's largest cellphone carrier, with 80 million subscribers.

When they meet with the agency's five commissioners this week, members of the trust said they would urge the FCC to put forth clear policies to prevent a combined company from blocking device makers or violating open network guidelines applied to wireline Internet service providers.

The companies announced plans to merge in June, just months after Verizon bought $9 billion in valuable radio spectrum in an FCC auction. If Verizon's merger is approved, the largest carriers could leap further ahead of smaller rivals.

"We're scratching our heads on how this agency can rush to let the nation's second-largest carrier gobble up a strong competitor like Alltel to become the nation's largest carrier," said Chris Murray, senior legal counsel for Consumers Union. "I guess it's Christmas in October for the wireless phone companies."

The five-member commission will vote Nov. 4 on approval of the merger, along with a separate proposal for the merger of Clearwire and Sprint Nextel. Verizon's merger with Alltel is also being reviewed by the antitrust division of the Department of Justice.

An FCC source, who spoke on the condition of anonymity because the deal is still under review, said the proposed merger was being rushed because of pressure from the carriers to complete the deal before the presidential election.

Verizon Wireless has said that the merger could benefit consumers by bringing Verizon's heft and technological advances to rural areas. Verizon has agreed to maintain roaming agreements with smaller rural carriers that use Alltel's networks for the remainder of customers' contracts or for two years, whichever is longer. The public interest groups said the FCC should force the companies to extend roaming agreements even longer, which would help smaller rivals remain competitive with national carriers.

Verizon and other carriers have over the past year moved toward allowing a variety of devices to be used on their networks, FCC spokesman Matthew Nodine said.

But Ben Scott, policy director at Free Press, said Verizon's promises to open their networks to any devices and technologies hasn't come to fruition.

"Establishing openness conditions is good policy to protect consumers from growing consolidation in the industry," Scott said. "Since Verizon has already said they wanted open network and devices and applications, the only reason they would object to this condition is if they had other plans."

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