Groups Ask FCC to Turn Down T-Mobile/Verizon Spectrum Swap
Public Knowledge, Free Press and the Diogenes Telecommunications Project filed separate petitions asking the FCC to reject the proposed Verizon/T-Mobile spectrum swap, in which the companies propose the purchase and exchange of AWS licenses in 218 markets. RTG also filed a petition to deny (CD July 11 p14). But whether the petitions will have much effect remains to be seen, especially since the FCC seems well on the way to approving deals linked to the swaps, in which Verizon will buy AWS licenses from SpectrumCo, Cox and Leap Wireless.
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"Most groups that filed, including us, were not purely opposed to T-Mobile’s spectrum acquisition -- we filed the [petition] based on the fact that the second transaction ought not to occur unless the first transaction, upon which it is predicated, is heavily conditioned,” Free Press Policy Adviser Joel Kelsey told us Wednesday. “Essentially, if the commission can address the myriad of problems created by the SpectrumCo deal through divestitures and conditions, the T-Mobile spectrum sale is a good thing for consumers and competition.” Though the deal involves selloff of some of Verizon’s spectrum, “the increasing spectrum gap between Verizon and all the other carriers is becoming an insurmountable obstacle to meaningful competition that benefits consumers,” Kelsey said.
"No one really believes in a universe where it is better to approve Verizon/SpectrumCo but deny Verizon/T-Mobile,” said Public Knowledge Senior Vice President Harold Feld. “The real question is whether Verizon/T-Mobile can justify Verizon/SpectrumCo. I also think that if the FCC takes action on any of the remaining spectrum issues in Verizon/SpectrumCo, such as a data roaming condition as a back up in case the D.C. Circuit tosses out the rule, then they are likely to apply it to T-Mobile as well.”
"The instant transaction if viewed in isolation would, for the most part, be appropriately viewed as serving the public interest,” Free Press said in its petition to deny (http://xrl.us/bnginm). “Aside from Verizon increasing its AWS holdings beyond what it will ever need in 17 Cellular Market Areas (CMAs), the transaction involves efficiency-enhancing spectrum swaps and the procompetitive acquisition of AWS spectrum by T-Mobile, a maverick carrier with a demonstrated need for additional spectrum.” The problem is, Free Press said, the Verizon/T-Mobile deal depends on approval of the other transactions. “Because those transactions, even when subsequently modified by this transaction, are not in the public interest, it logically follows that this contingent transaction is not in the public interest,” Free Press said.
The proposed Verizon/T-Mobile spectrum swap potentially “leaves both parties better off, giving Verizon a definitive edge in its quest to build a comprehensive nationwide LTE network, and providing T-Mobile with the path to LTE,” Public Knowledge said. Other regional carriers could end up picking up licenses as well as an outgrowth, the filing said (http://xrl.us/bngiop). “But while these are good things they do not satisfy the Commission’s requirement that it promote the public interest -- the Commission’s broader aim should be to promote competition generally, and not just a few competitors,” Public Knowledge said.
"I doubt the petitions to deny will be successful, but they could indirectly have the effect of keeping pressure on the FCC to impose conditions on the Verizon/cable deals and, more generally, to move forward on industry-wide structural reforms sought by competitors of Verizon and AT&T,” said Jeff Silva, analyst at Medley Global Advisors.
Meanwhile, comments were also due on an FCC public notice on how a proposed license swap between Verizon Wireless and T-Mobile would affect the Verizon/cable deals.
Verizon Wireless, SpectrumCo and Cox said in joint comments the proposed transactions all “demonstrate that the secondary market for spectrum can work to efficiently put existing spectrum into the hands of parties that can put it to use to serve customers and to expand and enhance 4G LTE mobile broadband services -- but only if the Commission promptly approves transactions like these.” While the government works to get more online for wireless broadband, “the Commission correctly has recognized that secondary market transactions such as these are equally important to allow wireless providers to put existing spectrum to work to help address skyrocketing consumer demand for mobile broadband services,” the companies said (http://xrl.us/bngio9).