Alltel

Verizon-Alltel Merger Provides Roaming Guarantees

Bernie — Tue, 04 Nov 2008 11:56:00 -0500

The “horse trading” effect was strong at the Portals, headquarters of the FCC, today. Today’s historic FCC meeting was delayed by over four hours as dealmaking between commissioners took place before their votes were counted on issues with significant competitive implications. One of those decisions will potentially create the largest wireless service provider in the U.S., as Verizon’s merger with Alltel was approved. Assuming it still makes financial sense, Verizon will surpass AT&T as the biggest wireless kid on the block, with 70 million+ subscribers. Conditions that were placed on the merger include divestiture of additional markets, including the entire states of North and South Dakota and guaranteed roaming requirements.

The roaming requirements are of particular interest because of their impact on the wireless sector competitive environment. Roaming revenue is crucial to the cash flow of smaller rural and regional wireless carriers. These same carriers feared that the market power of a company the size of the new Verizon could simply change the rules on roaming and dictate unfavorable, and perhaps crushing, terms. Those interests pushed for hardline roaming requirements to be attached to any merger approval. What they got was four years. The FCC’s approval of the merger is contingent on the new Verizon guaranteeing that both Verizon’s and Alltel’s current roaming agreements will remain in place for at least four years. The devil is in the details, and the exact terms of these contingencies won’t be fully understood until the final ruling is examined. Some will ask that while four years does provide some stability, what happens in year five?

Upcoming FCC Meeting Holds Huge Competitive Implications

Bernie — Thu, 16 Oct 2008 16:48:32 -0400

Decisions made at the upcoming FCC meeting on November 4th could significantly impact telecom’s competitive landscape. The tentative agenda includes two huge wireless merger approvals, a vote on the “whitespace” unlicensed spectrum order, and revamping of the intercarrier compensation system used among telecom carriers. The wireless merger decisions include the Verizon – Alltell and Clearwire-Sprint sprint deals. The “whitespace” inititiave uses spectrum in the “whitespaces” between television channels that will be freed up upon the digital TV transition. This spectrum is prized because of its good propogation and the significant amount of spectrum that will be available. There is significant opposition from broadcasters and established wireless carriers, including T-mobile, who argue that the use of this spectrum will create serious interference problems for their services. Here’s a breakdown on some of the potential implications if these initiatives pass muster on the Nov. 4th meeting.

Implications from the Verizon-Alltel deal include:

A combined Verizon-Alltel will create the largest wireless carrier in the U.S., surpassing the current number one carrier AT&T
As a condition of the merger, the new entity will have to shed numerous rural markets (approx 100 at last count), opening the door for potentially new competitors in those markets

Implications of the Sprint-Clearwire deal include:

Formation of a true nationwide WiMAX operator, who could potentially offer a third broadband pipe option into the home
Empowerment of several large cable companies to offer their own branded broadband wireless service
A first to market lead of months (maybe years) over other 4G competitors

Implications of the “whitespace” initiative include:

The potential empowerment of numerous competitors who can offer yet another broadband wireless option, who some call Wi-Fi on steroids
Potential interference with existing wireless carriers and broadcasters that will have to be resolved
Potential for a plethora of new wireless devices and applications that are designed to take advantage of the new connectivity.

The implications of intercarrier compensation (ICC) reform are really too complex and lengthy to list in a blog post. ICC is a set of rules that dictates how telecom carriers compensate each other for interconnecting calls. It’s a myriad of state and federal rules that is so complex that the reality of this being resolved at this upcoming FCC meeting is laughable. There are billions of dollars at stake and entrenched special interests of large and small wireline carriers, wireless, Internet, and cable companies, most of whom have powerful influence in Washington. If there ever were a contentious issue in telecom policy, this is it. It’s going to take real leadership to reform the system, and with a new administration on deck, it’s highly unlikely that this issue will be dealt with in any meaningful way until next year. If reform does happen, and that’s a big if, it could fundamentally change the telecom system as we know it, with winners and losers, and probably a lawsuit or two to boot. Should be an interesting meeting

Verizon/Alltel Divestiture Carries Competitive Implications

Bernie — Wed, 23 Jul 2008 17:25:47 -0400

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 Expands Wi-Fi Footprint

Bernie — Thu, 26 Jun 2008 11:09:22 -0400

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 Launches EVDO Rev. A

Bernie — Mon, 23 Jun 2008 22:59:54 -0400

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.

Alltel Acquisition by Verizon is Official

Bernie — Thu, 05 Jun 2008 11:07:06 -0400

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.

Verizon Rumored to be Acquiring Alltel

Bernie — Wed, 04 Jun 2008 16:37:15 -0400

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 Establishes Best Buy Retail Presence

Bernie — Sun, 25 May 2008 15:08:03 -0400

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.

Alltel Rewards My Circle Members

Bernie — Wed, 23 Apr 2008 09:32:16 -0400

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 Joins Unlimited Party

Bernie — Mon, 10 Mar 2008 15:54:37 -0400

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.