WASHINGTON (CN) – The United States and Vermont sued Verizon and Rural Cellular Corp. in an antitrust complaint, claiming the companies’ merger will reduce competition and increase the cost of cell phone service in Vermont, parts of New York, and northeast Washington.
Verizon agreed to buy Rural Cellular for $2.7 billion in July 2007. Verizon has 65 million subscribers in 49 states; Rural has 790,000 subscribers in 15 states, according to the federal complaint.
“As a result of the proposed acquisition, residents of these areas will likely face increased prices, diminished quality or quantity of services, and less investment in network improvements for these services,” the complaint states.
Verizon is the 2nd largest provider of mobile wireless services in the United States; it earned $43 billion from its 65 million mobile wireless telecom subscribers in 2007, the complaint states. Rural is the 10th biggest, and earned $635 million from its 790,000 subscribers in 2007.