Sprint, T-Mobile Ask FCC for More Information on Verizon's Spectrum Plans
Verizon Wireless was surely hoping its deal with Comcast and three other cable companies would proceed quietlythe mirror opposite of what happened when AT&T tried to buy T-Mobile in 2011. But, no such luck. Sprint, T-Mobile, DirectTV, the Rural Telecommunications Group and the Rural Cellular Association believe that too little information about the deal has been released and are calling on the Federal Communications Commission to halt its review until details of the agreement have been made clear.
Separately, rivals are also asking questions about a Verizon deal with Cox Communications to purchase some of its spectrum for $315 million. In November 2011, Cox announced it was discontinuing its wireless service, citing its inability to compete in the marketplace, and in December it announced that it was selling its 20HMz licenses, covering 28 million people, to Verizon, and that each would become "agents" to sell the others products and services.
"As a result of the incomplete submissions by the applicants, neither the Commission nor interested parties have an adequate basis upon which to assess the public interest implications of the proposed transactions," according to a Feb. 8 letter to the FCC signed by Sprint and the other above-mentioned parties. Wireless Week first reported the letter and the publication received an advanced copy of the document from the public interest group Public Knowledge.
The letter continued, "The Commission should suspend both the pleading cycle in this proceeding and the informal 180-day 'transaction clock,' and reset them to zero once the applicants have provided full disclosure of their arrangements."
Public Knowledge, along with three companies, asked the FCC on Feb. 7 to stop its review until more marketing-related information is released, said the report.
Facing criticism, Verizon and Cox very quickly submitted marketing details to the FCC, though as sealed files under a protective order.
On Feb. 3, Sprint signed a second letter, essentially saying they're glad Verizon filed something, but they can't respond to something that's not public, so more information is still needed.
On Dec. 2, Verizon announced a deal with SpectrumCo, the joint ventures between Comcast, Time Warner and Bright House Networks, in which Verizon would pay SpectrumCo $3.6 billion for 122 new spectrum licenses for its Long-Term Evolution (LTE) network in exchange for allowing the cable companies to resell its products and services.
"These joint-marketing agreements will turn these rival companies into partners, rather than competitors," wrote a concerned Sen. Al Franken (D-Minn.) in a Jan. 31 letter to FCC Chairman Julius Genachowski. Franken called on the FCC to hold a hearing to "further analyze the competitive impacts of these deals," and according to The New York Times' Bits blog, Sen. Herb Kohl (D-Wis.) agreed that he would.
Gangbuster sales of smartphones and tablets and the rising use of mobile video and other data-crunching applications have created an industry anxious for more spectrum to support users' habits. In March 2011, AT&T announced its intention to purchase T-Mobile. The smaller carriers spectrum would be a great asset in AT&Ts planned LTE rollouts.
In December, however, the FCC released a report finding that the dealwhich would have made AT&T the largest network by farwould be damaging to smaller players' ability to effectively compete and so ultimately hurt Americans, who would face fewer options and higher prices. Following the report, AT&T said it would stop its pursuit for the time being.
In January, during an earnings call, AT&T CEO Randall Stephenson described an FCC that's "intent on picking winners and losers" and acting as a logjam to progress.
"In the absence of auctions, our company and others in the industry have taken the logical step of entering into smaller transactions to acquire the spectrum we need to meet this demand," Stephens said during the Jan. 26 call. "But even here, we need the FCC's action and leadership, and unfortunately, even the smallest and most routine spectrum deals are receiving intense scrutiny from this FCC, oftentimes taking up to a year and sometimes longer before these are approved."
Sprint CEO Dan Hesse, during that carrier's Feb. 8 earnings announcement saw the competitive landscape differently, remarking that "the decision of AT&T to abandon its acquisition of T-Mobile clearly provides many more opportunities for us and for companies outside the top two to become much stronger competitors over time."