Verizon Faces Spectrum Exhaust in Some Markets without T-Mobile Swap

"The net transfer of AWS spectrum to T-Mobile in 125 Cellular Market Areas will allow T-Mobile to deploy LTE in additional markets and provide added spectrum to support LTE service in others; one-for-one AWS spectrum swaps in 76 CMAs will increase the amount of contiguous spectrum held by each of the Applicants, allowing each to use its spectrum more efficiently to meet its customers’ needs; and the net transfer of AWS spectrum to Verizon Wireless in 17 CMAs will provide needed additional spectrum resources in western markets where its spectrum holdings are limited,” the carriers said.

The AWS spectrum T-Mobile will get is “particularly well-suited to complement” its current AWS holdings and fits with the company’s “previously announced $4 Billion 4G network evolution plan, in which it is modernizing 37,000 cell sites, launching 4G HSPA+ in the 1900 MHz band, and deploying LTE in 2013,” the filing said.

Verizon Wireless also will benefit, the carriers said. Verizon’s “need for more spectrum is particularly acute across the western United States, where its existing spectrum holdings are limited and it currently holds virtually no AWS spectrum to supplement the 700 MHz Upper C Block spectrum initially deployed for LTE,” the filing said. “The SpectrumCo-Cox transactions will provide 20 MHz of AWS spectrum in the 17 markets where Verizon Wireless will receive a net transfer of AWS spectrum from T-Mobile, but it will not be enough to address customer demand. In those 17 markets, all located in the West, T-Mobile will provide Verizon Wireless 10 MHz of additional AWS spectrum in 14 markets and 20 MHz in three others to help address that demand.” With the transaction, Verizon’s spectrum holdings will be 99 MHz or less in 14 of the markets and between 102 and 109 MHz in the remaining three markets, the filing said. Even with the 700 MHz C block and AWS licenses from cable, Verizon warned its current spectrum holdings in the Western markets “is not sufficient to meet customers’ increasing 4G demands by the end of 2015 and in some cases even earlier.”

The carriers single out the Rural Telecommunications Group’s complaint, saying the group is “flatly wrong” that the transaction “will do ‘precious little’ to benefit competition or that it will not materially benefit T-Mobile,” the filing said. Regardless, “the commercial wisdom of this transaction is a business decision that provides no ground for denying or delaying approval of the requested transfers,” Verizon and T-Mobile said. “As the Commission has acknowledged, ‘it is not the Commission’s role to substitute its business judgment for that of the applicants,’ and it has therefore declined to substitute one party’s business decision for another.” Free Press, meanwhile, “rehashes claims from the SpectrumCo-Cox proceeding that Verizon Wireless should be denied this opportunity to secure additional spectrum needed to meet customers’ rapidly growing demand for LTE,” the carriers argue. “These recycled arguments are no more credible here."

"Verizon always delivers the same knee-jerk response every time it is challenged about its insatiable need for more spectrum,” RTG General Counsel Carri Bennet said in response. “It always claims its critics, like RTG, are flat wrong. However, it is Verizon that routinely misleads and obfuscates.” Bennet questioned whether Verizon is seeing a crunch in any market. “Verizon has plenty of cellular and PCS spectrum licenses suitable for LTE, plus 22 MHz of 700 MHz spectrum across the West,” she said. “Most companies would kill for a spectrum portfolio of this size. For Verizon, it is simply not enough. It obviously will not rest until it removes or severely debilitates all of its competitors."

Free Press Policy Adviser Joel Kelsey also defended his group. “Our case here is built on Verizon’s own internal confidential communications,” he said. “We are confident when the commission looks at that evidence, they see the same truth we see -- that Verizon is badly overstating its need for additional spectrum."

"The conditions Public Knowledge has asked for are spectrum specific, as we made clear in our comments,” said Public Knowledge Senior Vice President Harold Feld. “While we acknowledge that there are beneficial aspects to this transaction, Verizon and T-Mobile know that does not end the inquiry. If this transaction is approved, it confers a huge advantage on Verizon and T-Mobile with regard to deployment of their LTE networks. While we want these companies to deploy these networks, the FCC must also ensure that other carriers can remain competitive. That means a data roaming condition and ‘use it or share it’ to ensure that competitors have sufficient spectrum access to stay in the game.”