Verizon to Sell Spectrum Holdings to Prepare for AWS License Purchases

By Wayne Rash  |  Posted 2012-04-18

Verizon to Sell Spectrum Holdings to Prepare for AWS License Purchases

Verizon Wireless is planning to auction off its 700MHz A and B licenses, the mobile communications company announced on April 18.

The company currently operates its Long-Term Evolution (LTE) data service on 700MHz block C spectrum. According to Philip Junker, executive director of business development for Verizon Wireless, the sale of the 700MHz spectrum will take place if the company gets approval from the Federal Communications Commission to buy Advanced Wireless Service (AWS) licenses from a group of cable companies. The application for Verizon Wireless to buy those licenses was filed with the FCC late in 2011.

The spectrum purchase from cable companies Cox, Time Warner, Comcast, Leap Wireless and Bright House would take advantage of currently fallow spectrum. Originally the cable operators had planned to offer 3G wireless service in conjunction with wireless companies. Cox Communications was already well along in its planning to offer wireless service with Sprint, but that deal was already unraveling when the Verizon offer to buy the spectrum came along.

While Verizon Wireless won't actually start selling any of the lower 700MHz spectrum until the AWS spectrum purchase is approved, the company's statement said it was announcing the sale plans now to get things rolling with potential buyers. The idea is to make sure the 700MHz sale is ready to go once the AWS spectrum purchase is approved. Junker declined to provide a specific timeline for sales, however. "The sales process will unfold over time, and as we make sales we'll make application for license transfers when that happens," he said.

Junker said the current plans are for Verizon Wireless to add the 1.7GHz and 2.1GHz band pair to its holdings for use with LTE. While Verizon Wireless doesn't currently offer any mobile devices that work in these bands, they are available from other carriers, including T-Mobile. So adding such devices to the inventory should not raise any technical difficulties. Verizon Wireless already has licenses to the F block of AWS in Eastern United States, according to Junker.

Junker said Verizon Wireless should have a good idea where the company stands regarding FCC approval. The license applications have already gathered some opposition from public interest groups that worry that Verizon Wireless doesn't have enough competition and from other carriers, including T-Mobile, which would like at least some of the AWS spectrum being sold by the cable companies for its own network.

Junker said the primary goal of Verizon Wireless is to make the 700MHz blocks available to other carriers that could benefit from the additional bands. He said the company is seeking bids from both large and small carriers.

Spectrum Sales Wont Go Forward Without AWS Purchases


Junker noted that if the AWS purchase doesn't go through, then the sale of the 700MHz spectrum will be off. "The sale of the A and B licenses will benefit other carriers if we get the AWS," Junker said. "If not, we'll hang on to A and B."

While Verizon Wireless is trying to spin the spectrum sale so that it appears altruistic, the reality is that the FCC would unlikely grant the sale of the AWS spectrum without some sort of giveback. The arrangement to sell to other carriers will make the FCC happy as much as it will the other carriers.

However, the proposed 700MHz sale is meeting with some opposition. The Rural Cellular Association is saying that the sale is insufficient to resolve competitive concerns in the industry.

"In light of this announcement, the FCC should be more focused than ever on ensuring an interoperability requirement in the Lower 700MHz spectrum," said the association's President and CEO Steven K. Berry. "Further, Verizon's announcement increases RCA's concerns with the pending cable transactions, including access to usable, LTE-ready spectrum and access to commercially reasonable roaming and backhaul arrangements."

Berry urged the FCC to examine the proposed deal carefully.

Public interest group Public Knowledge also expressed doubts. "There is less than meets the eye to Verizon's spectrum sale," said Harold Feld, legal director for Public Knowledge "At the end of the day, Verizon and the cable companies will still have created a cartel in which Verizon will rule the air for wireless broadband, and cable will offer the only widespread true high-speed landline Internet services."

Feld asserted that whenever Verizon Wireless and AT&T have spectrum sales, all they actually do is sell to each other. He said the sale would only widen the gap between the largest companies and everyone else.

However, the wireless spectrum landscape has changed since Public Knowledge first raised the issue in 2011. Since that time, AT&T had to cede spectrum to T-Mobile, giving that carrier enough resources to also offer LTE, albeit on a more limited basis than the carrier would like. Meanwhile, Sprint has begun refarming its Nextel frequencies so that in conjunction with Clearwire it can offer LTE. In fact, Sprint together with Clearwire rivals the larger two carriers in terms of the amount of spectrum available for LTE.

Verizon Wireless says this sale is really all about making spectrum available to other wireless companies. "It's more about availability than raising cash," Junker said. He did say that Verizon Wireless hopes to make back the money the company spent to buy the spectrum in the first place, but what really matters is that Verizon Wireless meets its spectrum rationalization goals. "What's important to us is to have adequate spectrum," he said, "which is upper 700 and AWS." 

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