In order to gain regulatory approval for their acquisition of Alltel, Verizon agreed to divest markets in 22 states, which equates to over 2 million subscribers. The assets are valued at approximately $3 billion. The Wall Street Journal is reporting that AT&T may be the front runner to acquire those assets. We’re hoping such a deal won’t happen and here’s why. Allowing AT&T to gain those assets will prevent smaller wireless carriers from doing so, which ultimately harms the competitive wireless landscape. It’s just bad policy.
The former Alltel properties, including the entire states of North and South Dakota, are in primarily rural and small town America. Those markets, and more succinctly the territories in close proximity to those markets, are typically ‘underserved’ by wireless standards. Smaller carriers simply don’t have the scale to build robust wireless networks in these areas. The Alltel divesture offers a rare opportunity for smaller wireless carriers – an ability to acquire scale (in relative terms) and valuable spectrum. Scale that they can then leverage to improve market position and build competitive ability. Allowing AT&T to purchase these markets equates to the status quo. There are smaller wireless carriers and even upstart consortiums of wireline carriers interested in the Alltel properties. We say give them a chance. The benefits of those smaller carriers getting more skin in the wireless game far outweigh AT&T simply adding an accretive (measly might be a better descriptor) 2.5% in new subscribers and associated spectrum.