VZW/RCC deal bogs down in political morass: Lawmakers urge FCC to act fast on transaction

Verizon Wireless’ $2.67 billion play for Rural Cellular Corp. has turned intensely political, with Republican and Democratic lawmakers urging the Federal Communications Commission to rule soon on a deal whose review has been lengthy and controversial due to the potential impact on consumers in Vermont and elsewhere.
Sen. Bernie Sanders (I-Vt.) ignited the firestorm last October when he recommended the FCC either block the transaction or impose extensive conditions to address competitive concerns and the consequences of a national CDMA cellphone carrier, No. 2 Verizon Wireless, buying GSM operator RCC. (RCC also operates a CDMA network in certain markets.)
Sanders is backed by consumer and public-interest groups, who recently petitioned the FCC to deny the transfer of RCC’s wireless licenses to Verizon Wireless.
“The acquisition, as proposed, would have anti-competitive and anti-consumer effects in several, particularly rural, areas,” stated Consumer Federation of America, Consumers Union, Free Press, U.S. Public Interest Research Group and Vermont Public Interest Research Group.
The organizations said Verizon Wireless’ offer to divest to AT&T Mobility GSM networks in which Verizon Wireless and RCC cellular licenses overlap is insufficient to justify approval of the merger. They, like Sanders, said only the imposition of a series of merger conditions would satisfy them.
USF connection
There is a universal service twist highlighted by skeptics in Verizon Wireless’ proposed purchase of RCC, marketed as Unicel and a provider of service to 716,000 customers in 15 states in the Midwest, Northeast, Northwest and the southern regions.
“In the past five years, RCC has received over $150 million from the universal service fund to build the GSM network. RCC is a competitive eligible telecommunications carrier in most, if not all, of its 15-state territory. However, nowhere in the 61-page ‘Description of Transaction, Public Interest Showing and Related Requests and Demonstrations’ do the applicants state that VZW intends to continue to provide service as a CETC.” The groups assert such government subsidies have enabled RCC to offer multi-state, unlimited-anytime minute plans as low as $15 per month.
“VZW stated intent to divest most of the RCC system and to retire the remainder once another operator begins GSM service would mean that American citizens get little for their investment. Moreover, it would limit the choices of those who paid to have this network built,” consumer and public-interest advocates stated.
Verizon Wireless and RCC reply that concerns about the transaction are grossly overstated, while benefits from the tie-up are all but overlooked by critics.
“RCC’s customers will benefit from Verizon Wireless’ recognized superior service quality, a wide variety of handsets, seamless national coverage, improved customer care, a broader menu of service plan post-consummation, as well as new, high-speed wireless broadband services,” RCC and Verizon Wireless told the FCC.
Some lawmakers agree, saying it is time for the FCC – which extended the public comment cycle an additional 90 days – to act. The merger was filed at the FCC on Oct. 11, and has been pending for more than 140 days.
“We are concerned that any further postponement of the FCC approval process would slow new investment and wireless broadband deployment in rural areas,” stated Sens. Tim Johnson (D-S.D.) and John Thune (R-S.D.) and Rep. Stephanie Herseth Sandlin (D-S.D.) in a letter to FCC Chairman Kevin Martin.
Lawmakers from Alabama, Kansas, Florida and Michigan sent similar letters to Martin.