FCC approves two major telecom mergers

The Federal Communications Commission approved two landmark telecom mergers this week, paving the way both for a nationwide WiMAX network and a new wireless carrier with more than 80 million customers.

In rendering these judgments, the FCC allowed Verizon to acquire Alltel Wireless for $28 billion and to let Sprint spin off its WiMAX division to Clearwire to form a new $14.5 billion mobile broadband company. 

In approving the Verizon-Alltel transaction, the FCC said that either Verizon or Alltel must divest its licenses and operational network assets in five markets where the two companies each have significant overlap in their coverage. Additionally, the FCC says that Verizon must follow the Department of Justice’s recommendation and divest assets in 100 markets throughout 22 states in the Midwest and West Coast where the two companies each have overlapping coverage. (Watch a slideshow of the hottest mergers and acquisitions.)

In approving the merger of Clearwire and Sprint’s WiMAX division, the FCC determined that the newly formed company would not harm the competitive landscape in any U.S. market. The commission did, however, say that Sprint would have to drop its request for high-cost universal service support over a five-year period, and would also have to comply with the FCC’s wireless E911 location accuracy regulations for wireless devices.

FCC chairman Kevin Martin said that the Verizon deal would allow the carrier to “fill in holes in its coverage area and provide a more robust national wireless service to its customers,” while the Clearwire deal would “enhance competition and solidify wireless as an additional broadband platform” and “spur innovation and give greater choice and improved services to consumers.”

Now that Sprint has successfully spun off its WiMAX division to Clearwire, the new company will focus primarily on deploying a nationwide WiMAX network that will provide 4G coverage in both rural and urban markets. The new company, which will be known as Clearwire, will also concentrate on delivering wireless broadband to consumers, businesses and even government public safety services, Sprint says.

The Verizon-Alltel deal, meanwhile, paves the way for Verizon to become a super-carrier that will have an estimated 80 million wireless subscribers and also to expand its coverage into more rural areas throughout the United States.