Verizon, T-Mobile, Cable Consortium Spectrum Deals Win FCC Approval

By Wayne Rash  |  Posted 2012-08-23

Verizon, T-Mobile, Cable Consortium Spectrum Deals Win FCC Approval

The Federal Communications Commission has approved the sale of previously unused wireless spectrum owned by a group of cable companies to Verizon. The FCC also approved the sale of a portion of the spectrum to T-Mobile and Leap Wireless in a complex deal that involved a consent agreement between the cable companies and the U.S. Department of Justice.

The DoJ consent agreement put strict controls on the commercial agreements between Verizon and the cable companies that would have prevented the companies from competing with each other in terrestrial Internet delivery and in joint marketing agreements. The commercial agreements were initially combined into a single, very complex transaction. However, the Justice Department and the FCC agreed to split consideration of those agreements and the spectrum sale into separate actions.

All five FCC commissioners voted to approve the sale of the spectrum to Verizon, T-Mobile and Leap Wireless, makers of the Cricket line of prepaid phones on Aug. 23. However, two commissioners, Robert McDowell and Mignon Clyburn, withheld approval of the commercial agreements, saying that control over the agreements exceeded the FCC's authority. However, both of those commissioners concurred with the spectrum transfers in light of the DoJ consent decree.

FCC Chairman Julius Genachoswki said that Verizon had worked with the FCC and the Justice Department to satisfy the concerns of the commissioners as well as the concerns of several public interest groups that had opposed the spectrum sale. Genachowski took note of Verizon's cooperation.

"In particular, Verizon Wireless has committed to offering data roaming to its competitors and consumers. Roaming obligations have helped fuel competition, investment and consumer choice in America's wireless marketplace since the first cellular voice service in 1981," Genachowski said in a statement included in the order. "Consistent with the Commission's 2011 Order extending the basic roaming framework to mobile broadband, Verizon's enhanced roaming commitments will help ensure that consumers, particularly in rural areas, have more choices and are not denied access to affordable mobile broadband services."

Genachowski noted that the sale would advance the leadership of the U.S. in LTE deployment."In connection with the FCC's review, Verizon Wireless has also undertaken an unprecedented divestiture of spectrum to one of its competitors, T-Mobile, and has committed to significantly accelerate the build-out of its new spectrum," Genachowski said.

The FCC order includes some unusual provisions. It requires Verizon to transfer the spectrum it sold to T-Mobile within 45 days of completing the purchase with the cable companies. In addition, the FCC has placed a series of deployment requirements and reporting requirements on Verizon to ensure that the spectrum that was just purchased does not go unused. In addition, the FCC placed requirements regarding allowing roaming on its network by customers of other carriers, and it placed reporting requirements regarding roaming and regarding DSL service and other landline broadband use.

Interest Groups Opposed Deal as Proposed

The spectrum sale and the concurrent commercial agreements were strongly opposed by a number of public interest groups concerned that the result would be monopolies on broadband, and the elimination of broadband competition. Currently, Verizon provides DSL service to its customers and provides the FiOS fiber broadband service in some areas of the United States.

The Communications Workers of America, the union that represents many of Verizon's landline workers, was worried that the deal would mean the loss of jobs for its members. "The FCC's decision allowing Big Cable to virtually monopolize wireline and video connections to millions of homes will lead to job loss and hit consumers with higher prices," said CWA spokesman Chuck Porcari in a prepared statement. "It will slam the door on our country's high speed future because it has destroyed any incentive for Verizon to continue the build out of its high speed FiOS network."

"It is clearly an example of the FCC, just as the Department of Justice did last week, acting on behalf of corporate interests, not the public interest and clearly not jobs," Porcari added. He noted that the conditions contained in the DoJ consent decree and included in the FCC order were "weak."

The Alliance for Broadband Competition, which had previously opposed the Verizon–cable spectrum deal, was somewhat more satisfied with the conditions placed on the sale. "Our alliance of competitive carriers, trade associations, public interest groups, and other entities continue to have deep concerns about the future of the competitive communications landscape," an Alliance spokesperson said in a statement distributed to the press. "While the FCC's Order does not go far enough to ensure a competitive landscape, we are pleased that the Order addresses some of the concerns that we have raised with the Commission over the past several months."

T-Mobile CEO Jim Alling expressed his company's satisfaction with the deal in an email to eWEEK. "T-Mobile is delighted that the Federal Communications Commission has approved our AWS (Advanced Wireless Service) spectrum transaction with Verizon and we applaud Chairman Genachowski, the other Commissioners, and the FCC staff for their leadership and support on this matter," Alling said. "The combination of these new spectrum resources with our existing assets will add capacity and enhance performance of the T-Mobile network in many areas of the country as we turn on LTE services in 2013 to meet the growing consumer demand for mobile broadband services."

Verizon Wireless President and CEO Dan Mead provided a brief prepared statement to the press saying, "This purchase represents a milestone in the industry and we appreciate the FCC's diligent work to review and approve the transaction," Mead's statement said.  "We will work aggressively to ensure that we put this previously unused spectrum to use quickly to benefit customers." Mead did not respond to eWEEK's request for additional comment.

The spectrum sale, which an FCC spokesperson said was "the most complex transaction ever reviewed by the Commission," was first announced in December 2011, pending DoJ and FCC review.

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