Verizon Defends Spectrum Deals While T-Mobile, Sprint Fire Back

Verizon Wireless filed a nearly 300-page document with the FCC, defending its deals with major cable companies. T-Mobile and others responded March 6, insisting critical information is still missing.

Verizon Wireless filed a fists-swinging 299-page document with the Federal Communications Commission March 2, describing its spectrum-purchasing deals with SpectrumCo and Cox TMI Wireless as foremost "squarely in line with Administration and Commission policy," in the best interests of the public, and presenting "no countervailing harms."

The document has already prompted critics of the deal to file a response with the FCC.

Following criticism of Verizon's deals from a number of the carrier's competitors, as well as public interest groups, the Verizon document also describes how allotting the spectrum to Verizon will not reduce market competition and what the role of the FCC is in such matters anyway, particularly with the U.S. Department of Justice already involved.

"Declarations" by Suzanne Fenwick, executive director for corporate development for Cox Communications; Robert Pick, CEO of SpectrumCo (the joint venture between Time Warner, Comcast and Bright House Networks); and William H. Stone, executive director of network strategy for Verizon, are included, along with arguments from experts David E. Borth, an independent consultant and former Motorola engineer, and economist Michael Katz.

The version of the document posted to the FCC Website has great sections of missing text, and chunks of "highly confidential" text have been deleted. Stone, in particular, apparently had lots of juicy details to disclose.

While the whole thing seems to echo AT&T's nine-month process of trying to convince the FCC to let it buy T-Mobile, Verizon works to undo such comparisons, suggesting that while the AT&T deal would have shifted the spectrum holdings of the top-four U.S. carriers€”and so competition within the market€”the Verizon deal won't touch what's already in place; it will just bring in currently unused spectrum.

"The focus of the trigger should be on the total amount of spectrum available to other competitors, not how much an individual carrier holds in any given market," states Verizon. "It is well-established that providers may have significantly different spectrum needs while competing successfully, as the Commission has found that 'many carriers are competing successfully with far lower amounts of bandwidth today.'"

More spectrum is what every carrier is grabbing for these days; it's critical to keep pace with increasing numbers of smartphone and tablet users, not to mention data cards and small armies of machine-to-machine (M2M) deployments. T-Mobile, according to the Associated Press, has told the FCC that the Verizon deal will give T-Mobile an "excessive concentration" of spectrum.

The Rural Telecommunications Group (RTG) has also criticized the opaque manner in which Verizon is going about things, while others, including Sen. Al Franken (D-Minn.), have worried that some€”also opaque€”marketing details in the agreement will turn competitors into allies, resulting in higher prices and fewer choices for consumers.

Verizon argues all these points, suggesting sour grapes on the part of T-Mobile and downplaying the marketing deals.

"The industry is replete with joint marketing agreements and other joint ventures," Verizon writes. It adds that the FCC "did not review joint marketing agreements and other business arrangements closely akin to those at issue," and offers the example of the 2005 creation of Pivotal Wireless by Sprint Nextel, Comcast, Time Warner, Cox and Advance/Newhouse.

Hints at the still-vague marketing agreements continue to unnerve Verizon competitors. On March 6, T-Mobile, Sprint, DirecTV, the Rural Telecommunications Group and other parties filed a group letter with the FCC, asking it to stop the 180-day "shot clock" on the Verizon proceedings.

The deal, they say, only "nominally" involves a spectrum transaction; more problematic are plans that "provide the parties to those agreements with the ability to act as agents selling one another's services."

Due to the redacted portions of text in the Verizon document, says the March 6 letter, "neither the Commission nor interested parties can evaluate the transactions fully..."

As a matter of policy, the letter continues, "the Commission cannot allow the Applicants to deny production of evidence for the record without which interested parties would be unable to submit the type of fully informed analyses necessary to help inform the Commission€™s consideration of the public interest."

Once such information is made clear, it continues, "all concerned will be free to turn their attention to other issues in this proceeding."