Blog Post

Verizon to T-Mobile: Weren’t you the hypocrite in bed with AT&T?

Updated. Verizon Wireless(s vz)(s vod) and its cable partners aren’t taking T-Mobile’s bashing of their proposed spectrum deal lying down. In fact, they’re accusing the carrier of hypocrisy, throwing back in T-Mobile’s face its own recent attempt to merge with AT&T(s t), which would have created the megacarrier to beat all megacarriers.

Speaking to the Federal Communications Commission last week, T-Mobile execs blasted Verizon’s proposed acquisition of the unused Advanced Wireless Services (AWS) services airwaves held by Comcast(s cmsca), Time Warner Cable(s twc), Bright House Networks and Cox Communications, in order  to augment its LTE network. T-Mobile pointed out that Verizon already owned AWS spectrum, which it has been sitting on for nearly six years. Basically, T-Mobile accused Verizon of hoarding airwaves — keeping prime 4G airwaves out of its competitors’ hands — and told the FCC the deal should be stopped.

Now Verizon, Comcast, Time Warner and Bright House are crying foul. In a letter to the FCC, they accused T-Mobile of contradicting the very arguments it made last year to justify its failed $39 billion acquisition by AT&T. At the time, T-Mobile saw no problem with two nationwide operators consolidating spectrum, networks and customers, but now it’s criticizing the Verizon-cable deal on the same grounds, the companies said. Here are excerpts from the letter, which draws from past T-Mobile FCC filings:

T-Mobile now claims that there will be “serious harm to competition and to consumer welfare in the wireless market by permitting a dominant carrier to foreclose acquisition of spectrum by smaller rivals,” even though the transaction will not eliminate any competitors, will not combine businesses, and will not transfer any customers. In other words, despite its earlier claims that the combination of two top-four facilities-based providers would have no impact on competition in a fiercely competitive marketplace, T-Mobile now argues that the acquisition of a discrete block of spectrum – an only spectrum – by a carrier that needs to meet its customers’ escalating demand for mobile services will “serious[ly]” harm” competition.

… T-Mobile cannot continue to have it both ways, and its attempts to extract competitive advantages during the transaction review process should be disregarded.

We reached out to T-Mobile, and while it didn’t have a direct response to the letter the cable operators and Verizon filed Thursday morning, but T-Mobile did open up a new front on its assault against the deal. Last week, Verizon offered to sell off extra 700 MHz licenses if regulators approved the cable-AWS transaction. In a statement, T-Mobile SVP of government affairs Tom Sugrue said the concession was just a diversionary tactic:

“Verizon’s announced plan to sell lower 700 MHz spectrum contingent on approval of its spectrum transaction with the cable companies is a tactical ploy designed to divert attention from its attempt to foreclose competitors from being able to acquire AWS spectrum — the last swath of immediately usable mobile broadband spectrum likely to be available in the near term.  This proposed sale does not mitigate the competitive harms created by Verizon’s pending transaction with the cable companies that would add to its spectrum warehouse.”

Update. T-Mobile reached back out to us to respond directly to the charges of Verizon and the cable operators in Thursday’s letter. Here’s the statement:

[The cable operators have] not raised anything new that has not already been addressed by T-Mobile in this proceeding.  Their hodgepodge of complaints is simply a smokescreen to try to hide the serious anticompetitive impacts that would result from this highly problematic transaction.  The FCC’s focus must be on whether vigorous competition will continue following this spectrum transaction between Verizon and the cable companies.  T?Mobile USA and many other parties have demonstrated that the long-term result would be less competition if Verizon is allowed to warehouse the last swath of spectrum likely to be available in the near term to provide meaningful nationwide competition in mobile broadband.