Verizon Wireless, T-Mobile Spectrum Deal Fails to Curb Critics' Concerns

NEWS ANALYSIS: Verizon's divestiture of spectrum to T-Mobile is expected to eliminate one hurdle to Verizon’s plans to buy spectrum from cable companies, but other objections concerning the concentration of ownership and a lack of competition remain.

The joint announcement by Verizon and T-Mobile that both companies had agreed to a complex spectrum purchase and swap arrangement will apparently eliminate T-Mobile€™s objections to the purchase by Verizon of Advanced Wireless Services spectrum from a group of cable companies.

Statements made by T-Mobile to eWEEK indicate that the deal is contingent on regulatory approval. However, the regulatory approval has been challenged by T-Mobile, among other entities, to Verizon€™s plans to buy AWS spectrum from a group of cable companies.

In a statement provided to eWEEK by a T-Mobile spokesperson, the company noted that it had been saying that Verizon€™s deal with the cable companies wasn€™t in the public interest, but that now T-Mobile€™s position had changed. All of that happened when Verizon agreed to sell some of that spectrum to T-Mobile, the spokesperson said.

€œWe believed the transaction represented an unfair concentration of spectrum in the hands of the nation€™s largest wireless carrier,€ the spokesperson said in a statement to eWEEK. €œThe significant spectrum divestitures by Verizon announced today are good for competition and consumers.€

The spokesperson also noted that while the T-Mobile agreement to purchase and swap AWS spectrum is a separate transaction from the Verizon deal to buy cable company spectrum, it is contingent on the approval of the cable company deal. €œOur agreement with Verizon is subject to separate FCC review and approval,€ the spokesperson said, adding, €œbut it is contingent upon completion of Verizon€™s transaction with the cable companies since much of the spectrum we are acquiring is now held by the cable companies.€

While T-Mobile has not explicitly said that it would withdraw its current objection before the FCC, it would be necessary for that objection to be disposed of, and the fastest way for T-Mobile to make that happen would be to withdraw its objection. T-Mobile, it should be noted, has said it will have refarmed its existing Evolved High-Speed Packet Access (HSPA+) spectrum to 1,900MHz and implemented a 4G Long-Term Evolution (LTE) technology systemwide by the end of 2013.

The HSPA+ system refarming will be necessary if T-Mobile is to offer the Apple iPhone 5 when it ships in the fourth quarter. T-Mobile has already begun supporting iPhones by selling accessories in its stores and providing technical support. Furthermore, the company has said that by offering the new frequencies it will support iPhones as well as international GSM phones in the United States. T-Mobile€™s first iPhone-friendly data cell saw service at Apple€™s Worldwide Developers Conference (WWDC) in San Francisco in mid-June when the company launched test service there.

However, despite T-Mobile€™s probable withdrawal of objections from Verizon€™s cable company spectrum deal, other groups remain opposed. Rebecca Mark, spokesperson for the Alliance for Broadband Competition, said in a prepared statement that the group€™s objections to Verizon€™s agreements with the cable companies are about a lot more than spectrum.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...