November 10, 2007

Sen. Sanders Questions Deal
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Cellular telephone service in Vermont, notoriously spotty throughout the mountainous and largely rural landscape, could get worse if Verizon Wireless acquires a competitor, the Rural Cellular Corp., which operates under the name Unicel. Why? Because if the acquisition is approved by the Federal Communications Commission without specific protections, then Verizon Wireless would have a near state monopoly that could affect everything from whether there is cell phone coverage in certain areas to the price of service.

But there's another troubling aspect to Verizon Wireless' plans. Verizon is one of a limited number of cell phone providers to use a network technology called CDMA. Unicel and other common providers such as AT&T and T-Mobile use a technology known as GSM. By taking over Unicel's business in Vermont, Verizon could disrupt the service of cell phone users who rely on GSM networks. In short, the acquisition could affect not only Unicel's tens of thousands of current customers in the state (who, Verizon says, would receive new handsets compatible with its infrastructure) but also service for customers of other cell phone networks who "roam" on Unicel's GSM network, including those doing business in the state and tourists.

If you think this would put the state at an economic and social disadvantage, you'd be right. It also threatens to inconvenience an awful lot of people who've come to rely on mobile phones, whether at home, for business or when traveling. That's why Sen. Bernie Sanders, I-Vt., has alerted the FCC to the serious problems posed by Verizon Wireless' proposed acquisition. Since Congress has prevented states from regulating mobile phone services, it's incumbent on federal regulators to ensure that the fierce competition in the country's mobile phone sector doesn't adversely affect small states such as Vermont.

"Vague promises about undetermined build-outs over some extended future time period will not meet the real-world needs of Vermont business and consumers," Sanders wrote in his letter to the FCC. Sanders, quite rightly, has asked the FCC to approve the transaction only if Verizon Wireless agrees to meet certain enforceable conditions, among them:

* A commitment to provide coverage throughout the state.

* A commitment to maintain and expand the GSM network indefinitely or to sell the GSM network to a provider who would maintain and expand it.

* A commitment to provide automatic roaming services at reasonable rates to other carriers.

There are echoes here of another deal in the offing: the sale by Verizon of its landlines to FairPoint, which is poised to become the leading telephone operator in northern New England if state utility commissions approve. While FairPoint spokesmen say the company plans to deploy the most up-to-date broadband technology and to expand broadband to underserved towns throughout both Vermont and New Hampshire, there are no regulations in place now to compel the company to do so (Vermont's Department of Public Service is negotiating with FairPoint to set conditions). Customers would have to wait and see if promises were kept.

Both commercial transactions, if approved, exemplify the practical difficulties of making Vermont the nation's first "e-state," the goal of Gov. Jim Douglas and the Legislature, which earlier this year created the Vermont Telecommunications Authority, a quasi-public body that's supposed to help deliver broadband and wireless services to every Vermont household within just three years. Meanwhile, telecommunications companies such as Verizon and Unicel and FairPoint are scurrying around buying and selling assets, proof that market forces could undermine the state's best intentions.

Sen. Sanders is right to fight on behalf of Vermont's mobile phone users. But where, we'd like to know, are New Hampshire senators John Sununu and Judd Gregg? This deal affects customers in New Hampshire, too. Or are the Granite State's Republican senators too enamored of laissez-faire capitalism to really care?

To file a comment with the FCC, click here.