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Summary:

Verizon hasn’t exactly done a bang-up job selling its critics on the merits of its 4G spectrum consolidation plans. T-Mobile would be a prime candidate to buy up Verizon’s extra 700 MHz airwaves, but it’s not interested and wants the FCC to kill the Verizon-cable deal.

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Updated. An interesting regulatory recently filing popped up over at the Federal Communications Commission showing Verizon hasn’t exactly done a bang-up job selling its critics on the merits of its 4G spectrum consolidation plans. Verizon is offering to part with a bunch of 700 MHz licenses if it gets permission to buy up the cable operators’ friendlier frequencies in the Advanced Wireless Services (AWS) airwaves. But one of the operators who stood to benefit the most from that sale, T-Mobile, isn’t interested and is urging the FCC to kill the Verizon-cable deal.

The filing (pdf) is a routine affair, notifying the public that FCC Wireless Telecommunications Bureau Chief Rick Kaplan met with T-Mobile CEO Philipp Humm and other T-Mo execs to discuss the Verizon’s pending $3.6 billion purchase of airwaves from Comcast, Time Warner Cable and Bright House Networks SpectrumCo. The FCC made it clear that Humm and the rest of the T-Mo crew wanted to see that deal quashed:

“In particular, the T-Mobile Representatives discussed the fact that, unlike T-Mobile and other wireless carriers, Verizon Wireless has not used its existing AWS spectrum in any way in the six years it has held the licenses, and that the instant transactions would add even more AWS spectrum to Verizon Wireless’ unused spectrum inventory. They noted that given this dismal track record on utilization of its current AWS spectrum, it would make no sense, and would be inconsistent with the Commission’s charge to ensure that spectrum transfers serve the public interest, to allow Verizon to acquire additional AWS licenses, especially at this time of an industry-wide spectrum crunch. The T-Mobile Representatives further described the potential anti-competitive effects of permitting the largest carrier in the industry to accumulate a large preponderance of the only immediately available spectrum suitable for deployment of LTE, thereby foreclosing any opportunity for competitors to immediately put it to use in deploying LTE.”

Last week, Verizon offered up an olive branch in the increasingly incendiary regulatory and political war surrounding the cable deal. By selling off extra 700 MHz licenses to its competitors, carriers and other critics should have no reason to oppose its grab for the AWS airwaves – or at least that seemed to be the idea. T-Mobile, however, would have been one of the likeliest candidates to take Verizon up on its offer. It’s the most spectrum poor of all of the major operators and to get LTE off the ground in 2013 it’s being forced to cannibalize its 2G networks.

So why isn’t T-Mobile tantalized by Verizon’s offer? Two reasons: 1) The spectrum Big Red is selling just doesn’t fit with T-Mobile’s LTE plans, no matter how meager they might be, and 2) T-Mobile probably feels it has a shot at getting those same cable AWS licenses if it convince the FCC to put the kibosh on Verizon’s sweetheart deal.

The 700 MHz airwaves in question are some pretty choice frequencies in major markets, but they’re hardly nationwide (there’s no licenses in New York City Boston or Seattle, for instance). Meanwhile T-Mobile owns no 700 MHz of its own. Even if it were to buy up all of the spectrum Verizon was selling, it would spend a lot of time and money building infrastructure and procuring dual-band LTE handsets while receiving relatively little benefit – a powerful, but very piecemeal network.

The cable operators’ spectrum, however, is another story altogether. The SpectrumCo assets combined with Cox Communications’ separate AWS sale could be used to build a near-nationwide metro-area footprint. AWS also happens to be exactly where T-Mobile plans to deploy LTE, meaning that adding the cable airwaves to T-Mo’s already planned 4G systems would be relatively easy. That’s why T-Mobile is holding out for the bigger prize, which can only be gained if the Verizon-cable deal is sent to its grave.

It’s not that Verizon’s extra 700 MHz licenses aren’t valuable – they’re just more valuable to particular carriers depending on where they plan to put LTE. T-Mobile may not be interested in what Verizon is selling, but you can bet AT&T is.

  1. Arther Casillas Monday, April 23, 2012

    First and for most verizon acquisitions will create a monopoly. verizon is already a premium service with premium prices to reflect that as of recent customers renewing their 2 year contract when upgrading their devices will be charged a $30 fee just because. Speculation that a contract with unlimited 4g data with verizon can be broken by verizon without consequence leaves little consumer confidence . If for some reason verizon reaches it pinnacle what’s to say they will not break contract increasing premium and prices then consumers will be forced to settle 4 either the premium expensive Verizon or their inferior competitors which are playing catch up or cannot compete due to the lack of said spectrum.

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  2. William Diaz ✔ Monday, April 23, 2012

    Ive said this many times before that companies shouldnt be able to purchase extra spectrum unless they are already exhausting the current spectrum they have. The FCC ironically, knows if the carrier is exhausting spectrum, and should enforce the carrier to move to more spectrum efficient technologies (HSPA+, LTE, ETC) and show how they expect growth and how much spectrum they seek to capitalize entirely on their network. If it seems they are “banking” spectrum, it gets denied. In the case of T-Mobile, keeping a 4th national player in the mix is what the FCC wants, so the FCC should allow T-Mobile to purchase this spectrum, or at least another company that is co-branding with T-Mobile and other AWS carriers to build out.

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