The Rural Wireless Association, Inc. (RWA) is accusing the Federal Communications Commission (FCC) of “rubberstamping” T-Mobile’s acquisition of UScellular, saying the regulator failed to place sufficient guardrails on the deal.
Last week, the FCC approved the assignment of spectrum licenses, customers, authorizations, and spectrum leases from UScellular to T-Mobile. Under the transaction, T-Mobile would acquire UScellular’s wireless operations, customers, and approximately 30% of its licensed spectrum.
The deal calls for UScellular to retain its wireless towers and to lease them to T-Mobile for at least 15 years. The decision to focus on that portion of the business would appear to be a smart one because, unlike the wireless service business, it doesn’t require a nationwide footprint for scale or success and it brings a guaranteed revenue stream.
RWA complained that this decision “does nothing to mitigate harms to rural consumers and rural wireless carriers, including RWA’s members. FCC staff concedes that T-Mobile may have an increased incentive to raise prices post-transaction, yet it completely failed to put in place any measures to prevent T-Mobile from doing so. RWA remains concerned that the acquisition, as approved, will lead to further spectrum concentration, decreased competition, increased prices, and inadequate wireless coverage in rural America.”
RWA’s position is that UScellular helped provide competition in underserved areas and the approved deal will lead to fewer choices and higher prices for consumers, much like the earlier completed merger of T-Mobile and Sprint.
The T-Mobile/UScellular deal was first announced in May 2004, with T-Mobile agreeing to pay $4.4 billion for UScellular’s wireless operations and a portion of its spectrum.
“There will be more investment in communities because of this deal,” UScellular President and CEO Laurent Therivel said at the time. Noting that investment in rural America is costly and challenging, he said, “You need scale in order to do that.”
T-Mobile will be able to bring that scale in a way that UScellular could not, Therivel said.
