FCC Signs Off on AT&T Buy of Verizon Wireless Spectrum Licenses

AT&T and Verizon Wireless made a number of late concessions to win approval. On May 20, AT&T filed a letter at the FCC agreeing to sell off 15 MHz of spectrum in CMA 476 Michigan, covering Manistee, and the continued provision of wireless services on the Pine Ridge Indian Reservation. On May 27, Verizon Wireless agreed to continue CDMA roaming services in the AT&T divestiture markets for a one-year transition period. AT&T will pay Verizon $2.35 billion for the licenses. Verizon paid $28.1 billion for Alltel.

Copps said the divestitures satisfy some of the concerns he had when the FCC approved the Alltel order. “The Order we adopt now takes an important step to help restore at least some level of competitive balance through the implementation of Verizon Wireless’ divestiture of certain licenses and associated businesses, as required by the Department of Justice, to AT&T,” he said. “Absent these divestitures, consumers in large parts of the country would have inevitably experienced less competition, higher prices and lower quality of service.” Copps was the only commissioner to release a statement on the order.

"In order to ensure that approval of this transaction serves the public interest, we adopt several conditions, including conditions relating to roaming, preservation of service on the Pine Ridge Indian Reservation, and a commitment by AT&T to divest 15 megahertz of spectrum in one Michigan market,” the order said. “We expect that this transaction will benefit consumers, particularly throughout much of rural America, by giving them access to an array of additional service offerings."

The FCC looked at the overall effect on competition in all the markets covered. It conducted a more thorough review of 23 markets after an initial screen. The order includes information on each of the markets, but the FCC blanked out the percentage of market share AT&T and Verizon Wireless control in each of the markets.

NTELOS asked the FCC to examine whether any of Verizon’s and AT&T’s 700 MHz holdings create an unfair advantage over other carriers. “In evaluating this transaction, we decline to analyze whether, generally, the Applicants have an unfair advantage in terms of the quantity and quality of spectrum that they hold,” the FCC said. “Instead, we apply our initial screen to identify markets where spectrum aggregation by AT&T may result in competitive harms.” After further review, the FCC concluded that “generally, we do not find it likely that AT&T would be able to raise prices unilaterally or otherwise behave anticompetitively as a result of this transaction."

Cellular South, the Rural Telecommunications Group and NTCA asked that the FCC approval be conditioned on AT&T and Verizon Wireless agreeing to permit all of their handsets to be available to all Tier III rural carriers throughout the U.S. “We find that the proposed conditions instead apply broadly across the industry and are therefore more appropriate for a Commission proceeding where all interested industry parties have an opportunity to file comments,” the FCC said.

The National Association of Black Owned Broadcasters and others asserted that “the bidding process was not fair and open” and “did not provide adequate opportunities for businesses owned by minorities and socially disadvantaged groups to acquire any of the Divestiture Markets,” the FCC notes. “While it is possible that Verizon Wireless could have taken more steps to aid minority owned entities seeking to participate in the bidding” the FCC said it had to evaluate these complaints in light of language in the Verizon Wireless-Alltel merger order.

"We find that Verizon Wireless’s conduct and interactions with potential and actual bidders were in keeping with that language,” the order said. “In future transactions, the Commission may consider providing more detailed guidance about those specific steps, such as flexibility in divestiture goals and in financing commitment requirements, that divesting entities can take to encourage new entrants, small businesses, and businesses owned by minorities or socially disadvantaged groups to acquire Commission-ordered divestiture assets."

Copps said he was pleased the order addresses coverage in the Pine Ridge Reservation, home of the Oglala Sioux Tribe. “I saw first-hand the many challenges facing the Oglala Sioux in Pine Ridge when I visited less than a year ago,” he said. “While progress has been made in telecommunications there against very heavy odds, there is still so far to go. Indeed there is so very far to go across Indian Country where, for the most part, state-of-the-art communications are strangers in the land.” Copps also released a statement applauding the appointment of Geoff Blackwell to head FCC initiatives in Indian Country. “The Chairman has charged Geoff with the essential task of implementing the National Broadband Plan’s recommendations for the deployment and adoption of broadband on tribal lands, including the establishment of an Office of Tribal Affairs,” he said. “I am working hand-in-hand with the Chairman and my colleagues to make this a reality as quickly as possible."

"Given the number of important items on its agenda, we are pleased the commission has approved this transaction after a thorough review,” Verizon Wireless said in a statement. “This transaction will result in AT&T’s entering dozens of mostly rural wireless markets in direct competition with Verizon Wireless."

RTG said the roaming concession by Verizon is significant. “The ability to have fair roaming agreements is critical to all wireless carriers,” said Caressa Bennet, RTG general counsel. “Verizon and AT&T have had over 25 years to put together a nationwide network so that they are less reliant on others for roaming. Newer wireless carriers, those who acquired spectrum through auctions held since 1995, have not had the enormous head start of Verizon and AT&T to provide nationwide service, and roaming agreements are critical for these wireless carriers and for any new entrants to compete when selling a voice and data product that works on a nationwide basis.”