Verizon Wireless To Buy Alltel For $28B

CWmike writes "Matt Hamblen reports that Verizon Wireless has officially announced an agreement to purchase Alltel for $28.1 billion, which would make the new company the largest wireless carrier in the U.S., with 80 million subscribers. The deal will undoubtedly provoke scrutiny by the Federal Communications Commission and the Department of Justice, they acknowledge. Who loses? 'This [deal] is another nail in the coffin for Sprint," said Michael Voellinger, an analyst at Telwares in Parsippany, N.J. 'Alltel is a highly valuable and strategic roaming partner to the top four providers, and this acquisition would put long-term pressure on pricing and terms of those arrangements.'"

Great...

[cjb658]

Now our only choices will be AT&T and Verizon.

I for one welcome our new corporate overlords!

Can you say "Monopoly" ?

[unity100]

say it. now spell it.

because this is it.

although im a capitalist, im increasingly starting to think that big corporations need a MAJOR whack on their butts so that competition can be a possibility again.

That Alone...

[Nom du Keyboard]

Alltel is a highly valuable and strategic roaming partner to the top four providers, and this acquisition would put long-term pressure on pricing and terms of those arrangements.

That alone should be more than sufficient to nix the deal. Anything that would upset the balance in the market this much should require more than stringent guarantees of access at current prices for the next century -- and not for the next 18 months as would be more likely proposed.

Re:Great...

[Constantine XVI]

Even though T-Mobile doesn't have the greatest penetration in the US, they are (AFAIK) turning a profit, and have even bigger corporate backing from DT in Germany. That same backing also (hopefully) reduces the chances of a buyout.

Sprint, unfortunately, has neither of those advantages.

Re:Consumers?

[robo_mojo]

Fewer choices and greater prices.

Re:yeah.. but..

[Constantine XVI]

Nextel == iDEN phones & network, running nothing of note
Sprint == CDMA phones & network, running J2ME
Result: disaster

Verizon == CDMA phones & network, running BREW
Alltel == CDMA phones and network, running BREW
Result: probably much better

Re:I love merger's

[Nom du Keyboard]

In my area, there are two choices if you wish service outside the metro....Verizon and Alltel.

With the reduction of providers competing for your business from 2 to 1, do not expect your rates to be going down any time soon.

Re:Can you say "Monopoly" ?

[LandDolphin]

Yeah, you did not have as many annoying commercials, but you paid $5 a month to rent a home phone and $0.50 a min for a long distance phone call.

Re:Great...Ordering of Priorities

[DigDuality]

and if you give up your freedom for safety/security, then you're protecting nothing.

Alltel commercials

[wowbagger]

<humor>
I wonder what effect this will have on the Alltel commercials: The Verizon kid is the nastiest, most obnoxious of the lot.
</humor>

Re:Consumers?

[Constantine XVI]

The good: Verizon will likely merge Alltel's network with their own (relatively easy, since they use the same tech), boosting coverage for subscribers on both networks
The bad: Verizon will definitely replace Alltel's stock firmwares on new phones with their own, locking out features and making them consumer-hostile.

Customer backlash?

[jyunderwood]

No doubt the Alltel customers who are use to My Circle and relatively un-crippled phones compared to Verizon will not like this.

Would customers be able to get out of their contacts when they merge?

Re:No, that is a dictionary definition

[drhamad]

That's a dictionary definition. That is NOT a US antitrust law (or anyone elses antitrust law) definition. A monopoly market exists when one firm (or a small number of firms) have the ability to raise prices above the [competitive] market level. That alone is not an antitrust violation though. You also need to have them actually do something which is detrimental to the marketplace (predatory pricing, pricing below cost, etc).

Re:appeals process

[drhamad]

To appeal the FCC decision they'd have to go to the courts. Since the FCC is an administrative agency, the courts will basically look only at whether or not the FCC's decision was arbitrary/capricious. That's a pretty tough standard.

By the way, one of the main reasons XM/Sirius was likely approved was because they both lose craptons (that's the technical term) of money. If the choice is zero providers of a service, or one, we prefer taking the one. The other reason it can/has/will be approved is that there's many ways to get music in your car... FM Radio, HD Radio, CD's, iPod's/podcasts, etc. Between the two of these things, they came up with enough reason to approve it.

In the case of VZW/Alltel... well certainly there's no danger of VZW going bankrupt. Alltel is a different story. Their financial picture isn't all that pretty. But just one of them being in trouble won't necessarily be enough to approve it. And certainly there's no other way to get mobile phone service than to use a... mobile phone. But of course there's still 4 major cell carriers. I'd bet this is approved, but for different reasons than XM/Sirius.

Re:Monopoly 2.0

[Manchot]

Not true. There are many places where only one of those options is available, in which case there is a local monopoly. Not that it matters anyway, since a two-company oligopoly will be just as bad. AT&T and Verizon won't merge: they know that with the highly probable changing of the guard at the Justice Department this year, they'd be broken up instantly. No, what's far more likely is that unspoken collusion will occur, and they'll independently decide to stay off each other's turf. In a very real sense, two monopolies will exist side-by-side. And since all the good spectrum is locked up, it won't even be possible for competitors to form. The telcos need to go the way of the utility companies.

Re:Monopoly 2.0

[indiejade]

This is true. However, it is an oligopoly in which collusion and cartels are more likely. And this means the FCC still has pull.

Verizon probably won't win the early termination fees [zentu.net] suit if it goes to the US Supreme Court, and it knows that, so it's doing the next most predatory thing it can.

The article in the OP stated: "The companies noted that Alltel is serving 57 mostly rural markets that Verizon Wireless does not serve." In other words, Verizon is buying out the rural markets, giving those people less choice, even if -- and especially if -- the suit does go to the Supreme Court.

It's probably very interesting to note what kind of correlation there is between the states' litigation against Verizon (and its cronies) and the areas Alltel serves: like "dollars of litigation" total in rural states vs. the "dollars of litigation" in the cities that Verizon tends to serve. Very interesting indeed.

Re:Can you say "Monopoly" ?

[DragonWriter]

But can we at least have one of these conversations without people throwing around the "M" word like it applies to any and every situation involving a public corporation?

Yeah, its really annoying when people say "Monopoly" when the right term is "Oligopoly".

Even without Alltel being bought by Verizon, the four-firm concentration (combined marketshare of the top four firms) in the wireless market is over 80%.

What it certainly is not is a open, competitive market.

Re:Great...

[ColdWetDog]

What the fuck is our justice department doing? Have any of them heard of anti-trust?

We've got two political parties.

Both of them money from the two telecoms, two oil companies, two pharmas, two entertainment conglomerates and the two "news" companies.

What do you think?

Oh, and the two airline companies are too busy losing too much money to do much of anything else.