FCC Seeks More Data From Sprint, Nextel, Competitors In Merger Review
The FCC asked Sprint, Nextel and other commercial wireless carriers against which the firms compete for more information. As part of its review of the proposed Sprint-Nextel merger, the FCC sent identical letters to the applicants, plus Alltel, Western Wireless, Nextel Partners, Cingular Wireless, Verizon Wireless, T-Mobile USA and Southern LINC. The FCC requested a description and subscriber count for each mobile wireless price plan offered by the companies in each county of the U.S. for each month from Jan. 1, 2004, to Jan. 31, 2005.
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The FCC offered the companies 2 options for proffering the requested data. The first option defines “plan” as “a price plan composed of a unique combination of different features.” For each plan offered, companies must identify unique features and subscribership. Carriers taking the 2nd option can provide the requested data in a format that focuses on the primary plan they offer and add-on features available to those primary plans.
This is the 2nd time the FCC asked Sprint and Nextel for more data. In late April, the Commission sought data to back statements made in their merger application, with a deadline of May 20. “This is just a part of a regular information gathering process,” a Sprint spokesman said: “The same request went out [during a] Cingular-AT&T Wireless [merger review.]” The firms also received “a 2nd request” for data from the Justice Dept., which the Sprint spokesman said the companies have provided.
“The FCC wants to have a more thorough review than a routine transfer of control because this is a major merger of two major companies,” said a wireless attorney monitoring the merger. “It’s not unusual that [the carriers] received such requests and it’s consistent with the Cingular/AT&T Wireless merger review,” the attorney said. The information request is “a routine,” said Precursor Group wireless analyst Rudy Baca: “I don’t think it will have a negative effect on the outcome” of the merger review.
The interesting thing is that “the FCC only asked questions to CMRS providers, and there weren’t any questions to broadband radio service providers at 2.5 GHz, which are complaining the most,” the attorney observed. The 2.5 GHz spectrum band has become a key issue in the Sprint-Nextel merger debate. Allies say combining the companies’ holdings in that band would promote new broadband wireless services there. But opponents fear the combined company would wield too much market power in the band. Several parties, including NY3G Partnership, Preferred Communication Systems, Community Technology Centers’ Network, and the Consumer Federation of America and Consumers Union, list that concern as one reasons the FCC should deny the merger.
“Nextel and Sprint have a lot of spectrum at 2.5 GHz and if you combine it, they will have the majority there,” the attorney said, “but questions didn’t go to 2.5 GHz providers, probably because there are not many of them providing service there yet.” What the FCC “really wants” is to “get a hand of what the picture is going to look like with broadband rollout,” Baca said: “These requests aren’t necessarily related to the merger but rather to the broadband plans.”
Comparing the request to one in the Cingular-AT&T Wireless case, the attorney said it went to “similar companies.” But the differences, the attorney observed, include: (1) “Last time they [FCC] sent it to 6 companies but not to Cingular and AT&T, but this time they sent it to the applicants as well.” (2) “There were some new companies, not surprisingly -- Southern LINC, Nextel Partners and Western Wireless -- which weren’t there last time,” the attorney said, adding: “I don’t know why U.S. Cellular dropped off, which is interesting.” (3) “In the Cingular-AT&T Wireless request made in July 16, 2004, the FCC targeted 52 markets, but here they ask for information in each county.”
The information request “seems to be similar” to the one in the Cingular-AT&T Wireless case, the attorney said, “only this time it’s more complicated, because it’s much longer and they [FCC] are looking for specific information. [The requests for information about] revenue and minutes and pricing are much more comprehensive and more detailed than they sought last time.”
“The key to the [Sprint-Nextel] deal is the timing, which is wrapped up with nomination politics [at the FCC],” said Baca. “It’s not unlikely that there may be 3 commissioners very soon,” if Comr. Abernathy, whose term has expired, leaves the agency, he said. It’s been indicated Abernathy does not plan to give up her seat until a Republican has been named to the seat vacated by Chmn. Martin. “If the Senate goes nuclear… we are not likely to have a 4th commissioner,” Baca said. With 2 Democrats and one Republican on the Commission, “there may be more searching review for public interest,” he said: “This may push the [merger approval] timing back to very late this year or early next year.” But Baca reiterated he still doesn’t expect “significant divestitures or other conditions to be placed” on Sprint and Nextel once their merger is approved.