T-Mobile, complicating its position on Verizon Wireless’ deal with cable companies, has agreed to buy some of the once-cable-owned spectrum from Verizon, as well as trade some spectrum to the benefit of both parties. The spectrum coming from Verizon’s controversial cable deal is awaiting FCC and DOJ approval.
T-Mobile and Verizon Wireless have entered
into an agreement in which T-Mobile will purchase some Advanced Wireless
Services spectrum from Verizon, and the pair will also exchange some AWS
spectrum licenses, helping each to attain more contiguous blocks of spectrum
and realign spectrum in adjacent markets, T-Mobile said in a June 25
statement.
T-Mobile said the deal
will improve its position in 15 of the top 25 markets and is an addition to the
carriers already-announced
plan to spend $4 billion to grow its 4G network and roll out Long-Term
Evolution (LTE) technology.
This is good for T-Mobile
and good for consumers because it will enable T-Mobile to compete even more
vigorously with other wireless carriers, Philipp Humm, T-Mobile CEO and
president, said in the statement. We anticipate FCC approval later this
summer, in time for us to incorporate this new spectrum into our network
modernization and the rollout of LTE services next year.
In exchange for cash and spectrum covering 22
million people, T-Mobile will receive spectrum covering 60 million people, most
notably in Philadelphia; Washington, D.C.; Detroit; Minneapolis; Seattle;
Cleveland; Columbus, Ohio; Milwaukee; Charlotte, Greensboro and Raleigh-Durham,
N.C.; Memphis, Tenn; and Rochester, N.Y.
As alluded to by Humm, some of the spectrum
T-Mobile will acquire requires approval by both the FCC and the U.S. Department
of Justice because it will come to Verizon as part its controversial agreement
with cable companies SpectrumCoa conglomerate of Time Warner Cable, Comcast
and Bright House Networksand Cox Wireless. Some of the spectrum will also come
from a deal with Leap Wireless.
Verizons deal with the cable companies is
contested for facilitating Verizons ownership of what some say is too large a
portion of the industrys spectrum, as well as for marketing agreements in
which the parties will bundle and sell each others offerings, essentially
making allies out of competitors. Such a blow to competition, many worry, could
leave consumers facing fewer options and higher prices.
The proposed transaction between Verizon and
Cable is about far more than spectrum. The deal is a far-reaching non-compete
agreement between two huge competitors. While it's nice that Verizon will
cede a small portion of its vast spectrum holdings to T-Mobile, that does
nothing to mitigate the fact that Verizon and Cable want to stop competing,
stop investing, and stop innovating to the great detriment of consumers and the
American economy, the Alliance for Broadband Competition said in a June 25
statement.
Our position remains the same, it added.
We urge the DOJ and FCC to continue their thorough examination of these
agreements to ensure a competitive telecommunications industry."
The Alliance was launched May 11 and includes
representatives from T-Mobile, Sprint and the RCA-The Competitive Carriers
Association, as well as from consumer advocacy groups such as Public Knowledge,
the Free Press and the American Antitrust Institute.
Sprint, in a statement following an Alliance
kickoff call May 14, said:
The cooperative arrangements between these
companies encompass wired and wireless technologies, voice, video and data
services: the full complement of 21st century electronic communications
services and have the potential to touch each consumer and every government,
business, health care, and educational institution in the United States.
T-Mobile has also expressed concern about the
deal, though more particularly about the Verizon stockpile of unused AWS spectrum
that T-Mobile hopes to soon have its hands on. On April 19, Humm met with the
chief of the FCCs Wireless Telecommunications Bureau, Rick Kaplan, to discuss
the spectrum, which has gone unused for six years, according
to a letter to FCC from T-Mobile counsel Jean Kiddoo.
While theres belief that Verizon is selling
off some of its spectrum to reduce its overall portion in a gesture to
encourage the FCC to approve its deal with the cable companies, Verizon
Communications CFO Fran Shammo, speaking at a JP Morgan conference May 16, said
this isnt true.
I think we have been very good stewards of
our spectrum, Shammo told JP Morgans Phil Cusick. I think we have shown a
history there, and we dont want to be looked at as hoarding spectrum for the
industry. So it is the right thing to do, for us and for the rest of the
industry.
Follow Michelle Maisto on
Twitter.
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.
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