Verizon Wireless, a unit of Verizon Communications Inc. (NYSE: VZ) closed on the $28.1 billion acquisition of wireless rival Alltel Wireless late last week and is now the largest wireless company in the U.S., leapfrogging AT&T, Inc. (NYSE: T). The purchase amount includes $5.9 billion in equity and $22.2 billion in debt from TPG Capital, which had purchased Alltel for $27.5 billion in the spring of 2008.

Although it was a short-term deal that TPG Capital was after (it made some money, after all), Verizon is once again the top dog in U.S. wireless service. For some reason, the industry is insisting on combining all kinds of competitors to leave just a handful of them to serve customers. Will this combination be in the best interest of consumers? It doesn't matter. Like most mergers, it is meant to bring in more revenue and try to stem the losses Verizon Wireless has seen since AT&T became the exclusive distributor for Apple, Inc.'s (NASDAQ: AAPL) enormously successful iPhone.

Verizon's customer base of more than 83 million customers will now be the force to reckon with when newer devices are created by manufacturers and wireless carriers are looked at as release partners. With Verizon and Alltel both using the same technical standard -- unlike the disastrous Sprint and Nextel merger of 2005 -- this new entity is setting itself up from the start to be the pre-eminent wireless company in North America. Let's see if it can remain that way.

While AT&T, Inc. (NYSE: T) continues to bask in the sunlight of huge iPhone 3G sales, competitor Verizon Wireless isn't doing too shabby, either. In fact, one analyst says both wireless carriers are stealing all the customers and thunder from the other wireless carriers in the U.S. and riding off into the sunset. Those other wireless carriers? They're stuck eating dust at the moment.

Craig Moffett of Bernstein Research mentioned the U.S. economic slowdown as magnifying the effect, while stating "There simply isn't enough growth left in the market to support all players." He's right -- carriers like Sprint Nextel Corp. (NYSE: S) have been struggling for quite some time (even installing a new CEO), and fourth-largest carrier T-Mobile is just standing by gaining customers as needed. At the same time, AT&T and Verizon Wireless continue to grow. Remember, these are the remnants of the old telco companies that are now becoming monopolistic just as they were in the 1980s with the landline telephone market. Yes, I said monopolistic.

Moffett added that the rapid decline in voice spending with wireless carriers has not been made up, as hoped, with wireless data and texting revenues (even with rising prices). Moffett then added, "That makes subscriber growth -- again -- virtually the sole growth engine for the U.S. wireless industry." With wireless maturing as an industry, are there growth times ahead, or just a consolidation of carriers as all markets are saturated? Growth, especially in 2009, will be hard to come by.

A week ago, the wireless division of Verizon Communications (NYSE: VZ) -- Verizon Wireless -- surprised the entire U.S. wireless industry by stating its intention to open its network to any compatible device running any phone-based application any customer wanted. In a country where wireless operators have been extremely close-minded about just about everything, this announcement sets the stage for things to come. The wireless industry is facing major changes.

Verizon trumped itself this week, announcing that Verizon Wireless would partner with Google (NASDAQ: GOOG) in its "open handset alliance." When Google announced its Android mobile operating system platform about a month ago, the web's largest search provider had lined up an impressive array of partners right from the start. Its goal: to remove all the "walled garden" roadblocks from mostly American wireless companies to allow any customer to use any phone on any network by guaranteeing cross-carrier compatibility. Now, technically, the two actual radio standards in use among wireless companies in the U.S. will need addressing, but that comes later.

Until then, Verizon is enjoying a plethora of good press in embracing Google's "open" access model. Perhaps Verizon recognizes that the wireless landscape is set to change soon and it wants to get in its good graces through a potential large competitor, Google. After all, Google announced its intention to bid on upcoming radio airwaves next month (with unknown ambitions at this time), so established telecom companies may see their world turned upside down in the next five years. After a controlled amount of competition and a tight control on the customer, these changes will be most welcome by customers -- and hopefully wireless providers.

Verizon Communications (NYSE: VZ), reported Q3 earnings that dropped by 33% compared to the year-ago quarter, mainly based on tax-related charges. The telecom stalwart did see earnings reach $1.27 billion ($0.44 per share) in the July-to-September quarter, however. That figure compares to $1.92 billion ($0.66 per share) from 2006's Q3 period. Outside of Q3 charges, earnings would have been $0.63 per share, one-upping the consensus estimates of $0.62 per share.

Q3 revenue for the telecom carrier crept up almost 6% from the year-ago quarter, finishing at $23.8 billion, and as usual, Verizon's cellphone business saved the day (an all-too-common occurrence). Wireless operations are becoming the consistent engines of both Verizon and larger competitor AT&T (NYSE: T), as the two companies control the two largest cellular carriers in the U.S. for all the right profit reasons.

Verizon's wireless operations added 1.6 million new customers in the quarter, giving the company a total of 63.7 million customers. Verizon is catching up to AT&T's 65.7 million customers, although AT&T is not sitting still, and continues to add over a million new subscribers every quarter as well -- propelled nicely by being the only carrier to offer Apple (NASDAQ: AAPL)'s iPhone.

Outside of the cellphone arena, Verizon's FiOS business, which is the program to replace aging copper telephone lines with fiber optic lines directly to homes and businesses, did very well in the quarter. The company added 229,000 FiOS customers in the quarter, up quite a bit from the 203,000 it added in the Q2 period. It also began providing television service over those new fiber lines to 202,000 new customers in the quarter.

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Internet telephone provider Vonage Holdings Inc. (NYSE: VG) released quarterly results on Thursday that were better than what most analysts had expected. The company, though, still faces a tough legal fight with Verizon Communications Inc. (NYSE: VZ) that threatens the viability of the Internet phone provider.

It would help if the company had ever made money, but it hasn't. This sounds like the satellite television and radio companies in their infancies as well. Vonage, though, may be able to get there faster. That is, if Verizon doesn't run it into the ground.

Vonage's first quarter loss was $72.3 million ($0.47 per share). Although this is less than the year-ago quarterly loss of $85.2 million, the improvement has been overshadowed by legal messes with incumbent and overpowering telecom giant Verizon.

To a point, Verizon (and all other established telecoms) are frightened by the emergence of new technology which could take customers away from them. When an Internet connection can be used for television broadcasts, radio, telephone and web usage, telecom companies who can't cash in on that start sweating. In other words, it's no surprise Verizon is going for the jugular here.

Customers clearly want Vonage's services, as the company's revenue increased 64% to $195.9 million in the first quarter, up from $119.7 million a year ago. Shares went up by about 11% as investors were pleased with such large revenue and customer gains.

Vonage CEO Jeffrey Citron stated that technical workarounds are almost in place to allow Vonage to not "infringe" on two (of the three) Verizon patents that have it in legal trouble. If Vonage can bypass the alleged legal issues it has with Verizon soon and can continue signing up customers, the company may yet make a profit and survive.

With Wal-Mart recently getting onboard with Verizon Wireless to sell contract (postpaid) wireless plans and service inside its stores -- along with Verizon competitor Cingular Wireless -- it's now going to sell you DSL service too. Customers in more than 500 stores across 24 states will be able to see if DSL connectivity is available in their area and even place an order for service directly inside Wal-Mart.

Hmm, this is smelling more and more like a recent post I had questioning if Wal-Mart is just becoming a reseller of products and services without adding much to the value chain. Not that this is a bad thing -- because Wal-Mart takes a cut of all this in the end. If that helps fuel growth and keep shoppers in stores for more purchases, WMT investors should be pleased.

Verizon appears to be directly attacking cable companies while extolling the usually-cheaper DSL broadband internet service virtues to all Wal-Mart customers who will listen. Verizon 1, Comcast 0. For now, that is.