UPDATED: Today the Federal Communications Commission opened up the wireless communications market with its approval of a plan to allow independent devices to operate in the spectrum between digital TV channels. It also approved the merger of spectrum between Sprint and Clearwire that will create a nationwide WiMAX network. During that same meeting, it threw the existing operators a bone, and approved Verizon’s $28.1 billion deal to buy Alltel. This creates two new wireless networks backed, in part, by Google.
But first the Alltel deal, which held up the commission for four hours debating concessions. Once that deal closes, Verizon will be the largest wireless carrier in the U.S. with more than 80 million subscribers. Verizon will have to divest 100 markets in 22 states as part of a deal with the Department of Justice and the FCC, but the merger between Verizon Wireless and Alltel consolidates more power in the hands of the largest wireless players. It will likely lead to greater expenses for businesses as many of the roaming agreements between Alltel and other large carriers come up for negotiation.
Michael Voellinger, SVP of enterprise mobility at Telwares, estimates that as Verizon has to negotiate those roaming contracts with AT&T, T-Mobile and Sprint, it’s likely to end up with higher rates, leading to the potential for higher costs for enterprise (and consumer) customers of telecommunications services. However, as part of its approval, the FCC requires Verizon to keep roaming rates the same for the next four years.
The approval for allowing broadband-enabled devices to operate in the white spaces between the digital television spectrum was a bit more nuanced. The acceptance of the white spaces broadband is significant, but the FCC will impose a certification process and limits on the “loudness” of wireless devices operating in that spectrum for the time being. That means those gadgets may be hard to deploy quickly and in urban areas. That could drive up costs associated with such devices by lengthening time to market and limiting the market share.
Still, it’s a big win for for the large technology companies such as Google, Dell, Motorola and Microsoft, whcih have all backed white spaces. With the cable companies and Google also getting a win through their involvement in the Clearwire merger, it remains to be seen if the consumer will win, but Google certainly has. UPDATE: As Larry Page, co-founder and president of products, writes on the Google blog of the white spaces decision:
This is a clear victory for Internet users and anyone who wants good wireless communications…Google has worked hard on this matter with other tech companies and public interest groups because we think that this spectrum will help put better and faster Internet connections in the hands of the public.
Verizon doesn’t negotiate roaming agreements with T-Mobile and AT&T, because they can’t roam on those carrier’s networks. Furthermore, since they are already operating as a nationwide carrier, why would they need any new roaming agreements after absorbing Alltel? They’ve already got roaming agreements with Sprint and any remaining regional CDMA carriers for any areas not covered by existing Alltel or Verizon networks. The hundred market divestiture is mostly about spectrum, they will still have networks operating there.
Jesse, sorry for confusion and yes, you are correct that they are CDMA – but in the end game the intimation in the comment is regarding one less player in a small field. Intercarrier roaming can have impact to overall pricing as the market continues to evolve, and that particular component can affect margins. I also think if you look hard at where the technology is moving in terms of LTE and WiMAX, the story gets even more interesting as the standards collapse and become more interoperable.
@Michael
I still don’t see roaming being an issue here, eventual LTE convergence or not. I do agree that one less competitor is bad for consumers, though. I think the real issue here is that arguable the most consumer friendly carrier (Alltel) has just been acquired by what is clearly the least consumer friendly carrier (Verizon).