VZW’s expansion worrying Alltel’s roaming partners

Verizon Wireless’s competitors are not willing to take the megacarrier at its word on roaming, as Leap Wireless, cable companies and small CDMA operators have stepped up the pressure on the FCC to deny VZW’s bid to buy Alltel unless the commission enforces a nationwide roaming policy.

At issue is the tremendous competitive advantage a combined Verizon Wireless/Alltel would have in negotiating roaming rates with both big and small operators, as well as its ability to deny the competition roaming outright. VZW is already the second-largest operator in terms of subscribers nationwide, but its primary footprint lies in the metropolitan and mid-sized markets across the country. Combined with Alltel's, that footprint would give Verizon not only roughly 13 million new subscribers, surpassing AT&T, but also the nation’s largest rural and small-market footprint. Due to Alltel’s coverage throughout the great middle of the country, it’s been the preferred roaming partner for CDMA operators, big and small alike.

“While many consider the wireless retail market to be fairly competitive, the wireless wholesale market is not,” Leap Wireless said of VZW’s proposed acquisition in a statement. “In many markets the number of available roaming partners will decrease from three to two, and in some cases two to one. In addition, by growing larger through this acquisition, Verizon has less need to roam on other carriers and therefore the negotiating power of the other carriers is decreased. Rates and terms will likely reflect this, which ultimately results in consumers facing higher prices for service and less coverage.”

The big fear for those operators, though, is that VZW will refuse to deal with them entirely. The FCC requires operators to roam with one another, even though it doesn’t set specific rate guidelines, but operators don’t have to allow their competitors to roam — if operator A owns spectrum in the same market as operator B, then operator B doesn’t have to allow A on its network. For an operator such as Leap, which owns a lot of AWS spectrum where it still hasn’t built networks, that could be a problem. The same goes for SpectrumCo, the partnership of cable operators that bough spectrum in the last AWS auction. When it does deploy a network, it won’t be able to build a nationwide footprint overnight.