Ahead of their Alltel acquisition regulatory review, Verizon filed a letter with the FCC outlining their wireless spectrum divestiture plans. In hopes of reducing “market dominance” fears, they plan on divesting of 85 markets, including all of North and South Dakota, and rural serving areas in California, Colorado, Idaho, Montana , Minnesota, Kansas, Illinois, Nevada, New Mexico, Utah, Wyoming, Georgia, Virginia, North Carolina, South Carolina, and Ohio. Larger markets in the divested territories include Billings, Great Falls, and Casper. The divested territories may include either Alltel or Rural Cellular territories. Verizon’s acquisition of Rural Cellular is expected to close later this year. Additionally, Verizon committed to maintaining all existing roaming agreements with “regional, small and rural carriers” for the length of those existing agreements. Of course, once those existing agreements expire, those regional, small and rural carriers will need to negotiate a new deal. Judging by most recent roaming agreements between large and small carriers, “negotiate” can be a very relative term.

This potential opening of 85 markets presents opportunities with competitive implications. The usual suspects of AT&T and T-Mobile will surely take a look at acquiring these markets, and so will smaller carriers like MetroPCS and Leap. But perhaps even smaller rural carriers may get an opportunity to gain a foothold in these markets and offer a true competitive option to the large national brands. Smaller carriers, many of whom currently lack wireless assets, probably have much more interest in serving these rural territories. Should public policy mandate that the divested properties be given preferential acquisition treatment to carriers other than the usual suspects? Or maybe a consortium of rural carriers (new or existing) should consider trying to gain these wireless assets. These are questions worth debating.

Alltel announced a partnership with Boingo to dramatically expand their Wi-Fi footprint. The expansion adds 25,000 hotspots to Alltel’s network. The expanded service will be offered to anyone across the U.S. at $19.99/month for unlimited use or $3.99/day. Alltel also recently began bundling Wi-Fi with it’s EVDO broadband wireless service as the Internet Anywhere bundle for $69.98/month.

Alltel announced the launch of EVDO Rev. A service across multiple markets. Alltel plans an initial rollout of Rev. A to 18 market areas. Rev. A download speeds average 600 Kbps to 1.4 Mbps, with bursts up to 3.1 Mbps and upload speeds average 500-800 Kbps with bursts up to 1.8 Mbps. Alltel also announced it will continue to expand its existing EVDO network, which now covers 76 percent of its potential customers. By the end of 2008, Alltel expects to cover about 82 percent of its potential customers with EVDO. The service will be priced at $59.99/month.

The proverbial cat is out of the bag. Verizon is acquiring Alltel for $5.9 billion, plus the assumption of $22.2 billion in debt, a deal that was first reported by CNBC yesterday. "This is a perfect fit, with Alltel's high-value post-paid customer base, its solid financials, our common network technology, and significant, readily attainable synergies," says Verizon CEO Ivan Seidenberg. Alltel serves more than 13 million customers in markets in 34 states, primarily in more rural markets. Verizon expects the deal to close by the end of the year.

As we noted in an earlier post, this deal creates some interesting competitive implications, all of which can’t be examined this quickly. The deal seems to have come together really fast. There must have been some motivated principals. The Wall Street Journal reports that the previous buyers of Alltel were anxious to sell because their original leveraged buyout terms were becoming increasingly “ugly.” They are basically breaking even on the deal, and avoiding potential losses, because the complex debt transactions of the original buy out are now coming back to haunt them because of the credit crisis in the U.S. economy. The new outcome, if it passes regulatory muster, will create the largest wireless carrier in North America, with 80 million or so subscribers. By our estimation, Verizon, the quintessential traditional wireline telephone company, will now have double the number of wireless subscribers, compared to its wireline access lines (40 million as of their last quarterly report). Perhaps we should start thinking of Verizon as a wireless company with some wireline assets, as opposed to the opposite.

Update-6/5/2008 - As of 10:00a ET, the Wall Street Journal is reporting that Verizon and Alltel have come to terms on a sale, with Verizon offering $5.9 billion and the assumption of $22.2 billion in debt. More to follow soon.

There is a rumor floating around that Verizon is in talks to purchase Alltel Wireless for $27 billion. If the rumor holds true, a Verizon acquisition of Alltel would create the largest U.S. wireless carrier, surpassing the current leader AT&T, with a combined 80 million subscribers. AT&T currently has about 72 million subscribers. Such a move would have interesting competitive implications. For example, it may open the door for other interested carriers, wireline or wireless, to gain or expand wireless assets because anti-trust concerns will certainly force Verizon and Alltel to shed some overlapping or dominant territory. Secondly, it would expand the Verizon footprint and brand into more rural territories and perhaps impact wireless substitution there. Much more information to come on this potential blockbuster deal.

Alltel Wireless will begin marketing its products through Best Buy locations throughout its footprint. The new retail strategy will begin May 25th. Alltel expects to be in about 40 Best Buy locations. Alltel will initially feature specific handsets, including the BlackBerry Curve and Motorola’s RAZR and ROKR, before implementing more handsets later in the year.

In celebration of Alltel’s second year anniversary of its successful “My Circle” plan, Alltel is awarding an additional telephone number to all My Circle subscribers. My Circle plans allow subscribers to designate 5, 10, or 20 telephone numbers for unlimited calling to and from their wireless phone. Going forward, My Circle plan members will receive one additional telephone number to their My Circle plan for each subsequent two year period that they remain on the plan.

Alltel announced that they too will launch a $99/month unlimited wireless plan, joining all the other major wireless carriers who already have one. Branded Freedom Unlimited, Alltel’s unlimited plan basically mirrors other carriers, offering unlimited local and domestic long distance calling. Alltel also remains committed to its popular My Circle plans that allow subscribers to designate 5, 10, or 20 telephone numbers for which they can make unlimited calls to in any given month.

Alltel expanded their location based service (LBS) offering, through a nationwide roaming pact. Alltel LBS applications will now operate in 45 additional major markets. Alltel’s LBS applications uses a global positioning system (GPS) suite of applications including TeleNav GPS Navigator and Alltel Navigation, providing navigation tools directly on customer handsets. Additional applications include, Alltel’s WHERE application which directs subscribers to desired points of interest and Axcess Family Finder that enables parents to determine the location of their child's Axcess Family Finder-capable phone. Roaming fees will apply.

Alltel Wireless announced the availability of SalesNOW, a contact, activity and deal management software designed for BlackBerry wireless devices. SalesNOW allows professionals to track and manage contacts, deals, activities and e-mails and share information with a sales team. The application is targeting enterprise users and is priced at $25/month for an individual and $40/month for enterprise customers. Users must subscribe to a qualifying data plan.