FCC sets Aug. 1 vote on VZW/RCC deal

The Federal Communications Commission said it plans an Aug. 1 vote on Verizon Wireless’ proposed $2.67 billion purchase of Rural Cellular Corp., a controversial transaction that consumer advocates and Sen. Bernie Sanders (I-Vt.) have argued should be blocked unless conditions are attached to safeguard consumers and competition.
The FCC also will make a separate public interest determination on the foreign ownership aspect of the deal. Verizon Wireless is 45% owned by the United Kingdom’s Vodafone Group plc. The telecom act limits foreign ownership in U.S. wireless carriers to 25%. However, the FCC can waive the foreign ownership cap – all the way up to 100% – if telecom regulators deem a particular investment would not be inconsistent with the public interest. FCC foreign ownership rules also accord favored status to investors from World Trade Organization member countries.
The Department of Justice last month agreed to let the deal go forward after the parties agreed to a court settlement requiring the No. 2 wireless provider to sell off some mobile-phone licenses in Vermont, New York and Washington.
The VZW-RCC tie-up, announced last June and pending at the FCC for 280 days, comes as lawmakers and non-national cellular carriers raise more concerns about industry consolidation and its impact on roaming.
In an Oct. 29, 2007, letter to FCC Chairman Kevin Martin, Sanders recommended a number of conditions as a prerequisite for regulatory approval of a deal he said raised antitrust and service availability problems in Vermont.
In addition to having to provide 100% geographic coverage of Vermont within 30 months, Sanders wanted a commitment from Verizon Wireless – a CDMA carrier – to maintain, upgrade and expand RCC’s GSM network indefinitely. Sanders said Verizon Wireless originally agreed only to support RCC’s GSM operations, which operate under the Unicel brand, in the state for 18 months.
In another option outlined by Sanders, Verizon Wireless would have to sell the GSM network and spectrum assets to another service provider. Sanders called for a free exchange of Unicel’s customers’ phones for comparable Verizon Wireless handsets. The lawmaker also wants an enforceable commitment from Verizon Wireless to provide automatic roaming services at reasonable rates for voice and data – including wireless broadband – to other GSM or CDMA carriers.
RCC, headquartered in Alexandria, Minn., provides service to 716,000 customers in 15 states in the Midwest, Northeast, Northwest and the southern regions of the United States using both CDMA and GSM technologies. When it announced the acquisition last July, Verizon Wireless said it planned to deploy CDMA technology in RCC’s existing markets and convert GSM subscribers to CDMA service. At the same time, Verizon Wireless said it intended to maintain RCC’s GSM networks to avoid disenfranchising roaming customers of other GSM carriers.
Verizon Wireless, based in Basking Ridge, N.J., has more than 67 million subscribers, putting it just behind No.1 AT&T Mobility. But that could change soon. Verizon Wireless is pursuing a $28 billion play for No. 5 Alltel Communications L.L.C., which also employs CDMA and GSM technology and serves more than 13 million subscribers. Public comments on that deal are due at the FCC next week.