The fifth largest wireless phone company in the country,
Alltel, is being bought by Verizon Wireless. The deal, if approved by
regulators, would easily make Verizon the largest wireless company in the
country. There is little doubt that the deal will be approved. Verizon might
have to sell off or give back some of the wireless spectrum that it will
acquire that overlaps with areas it already operates within, but given the
recent history of wireless mergers (Cingular-AT&T Wireless; Sprint-Nextel)
and the approved acquisitions of other small wireless carriers (Dobson
Communications, SunCom, Edge Wireless, and Rural Cellular) the deal will likely
go through.
The question remains whether this transaction is really good
for consumers. Verizon's network will expand a little, but Alltel has always
seemed to be a bit of thorn in Verizon's side. Verizon even went so far as to
sue Alltel over one of its commercials earlier this year. In addition, in some
areas Verizon and Alltel were in direct competition with each other which will
now be lost. Over 13 million people had reason to choose Alltel as their
wireless carrier and now they lose that choice they made and become part of the
Verizon network.
There is also some question as to what will happen to the
CDMA network in this country. The three largest CDMA carriers are Verizon,
Sprint, and Alltel respectively. By 2010, Verizon intends to use LTE (Long Term
Evolution) technology on its 4G network. LTE is GSM based and the change will
leave Sprint has the only major carrier on the CDMA network and Sprint's
current future is open in the air with the rumors of potential mergers abound.
The Verizon-Alltel merger for some has been considered
inevitable given Verizon's past attempts to acquire the company and the
technology compatibility. The problem is where will this trend take us, there
appears to be no room for a fifth major competitor in the wireless phone
industry and considering the rumors of a T-Mobile-Sprint merger, how long before
the market is only big enough for 3 major carriers in this US.