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Carrier Claims Alltel-Verizon Anticompetitive

Verizon-Alltel

Rural wireless carrier Leap Wireless (NASDAQ: LEAP) is petitioning the Federal Communications Commission to deny Verizon Wireless' proposed acquisition of Alltel, claiming it would negatively impact its subscribers and give Verizon Wireless a "massive" amount of spectrum.

The San Diego-based carrier filed two petitions on Monday, the deadline for comment on the proposal and said the $28.1 billion purchase would prove anticompetitive for the market. The carrier wants the FCC to revise its existing Roaming Order by eliminating the home roaming/in-market exclusion and including data services. It also wants the agency to initiate a rule-making proceeding on spectrum caps.

"Verizon Wireless will have massive amounts of spectrum to provide mobile data services, and the FCC has to ensure that consumers will be able to roam on needed spectrum to provide seamless connectivity," Laurie Itkin, director of governmental affairs, Leap, told InternetNews.com.

The news comes as carriers continue to scramble for more spectrum to push out new wireless data services in the competitive market. Faster, better services are key to gaining and keeping new subscribers as carriers are all trying to reduce their churn rates.

One of Leap's petition is a joint filing with other carriers, including the Rural Telecommunications Group, SouthernLINC Wireless, SpectrumCo and the Organization for the Promotion and Advancement of Small Telecommunications Companies.

The FCC, which is reviewing the petitions, could not provide a count of filings or the number of parties stating opposition.

Small and rural carriers claim it is getting harder to negotiate automatic roaming agreements with the larger carriers and that consolidation will only make the issues worse.

Verizon Wireless declined to comment on the petitions and told InternetNews.com it plans to "respond fully" by Aug. 19, which is the FCC deadline to submit response comments.

Leap relies on roaming services from carriers to provide its users connectivity when out of its network range. For example, Leap subscribers are not able to access services in New York City, Itkin said, as Verizon Wireless will not sell roaming access to Leap. Verizon Wireless is a joint venture of Verizon Communications (NYSE: VZ) and Vodafone (NYSE: VOD)

"It will only get more limited to the point where Verizon customers will be the only ones who can get service wherever they are," Itkin explained. She added that while FCC regulations exist to help smaller carriers get roaming access services, no data services rules are set.

"That means someone using our service for laptop connectivity will have no wireless access as there is no data roaming regulations in place," she said.

If approved by regulatory agencies, the acquisition would make Verizon the largest U.S. wireless carrier as it would add Alltel's 13.2 million subscribers to its 68.7 million customer list for a total of 81.9 million customers. AT&T (NYSE: T) had 71.4 million subscribers as of the first quarter of 2008.

Rural carrier Alltel serves more than 13 million customers in markets in 34 states, including 57 rural markets that Verizon Wireless currently doesn't serve.