AT&T/Verizon Spectrum Deal Opposed in Filings at FCC

Under the deal, AT&T would buy 39 of Verizon Wireless’s lower 700 MHz B-block licenses in exchange for $1.9 billion cash and the transfer of several AWS licenses. The two carriers also unveiled spectrum agreements through private equity firm Grain. AT&T said it will lease three 700 MHz B-block licenses in North Carolina that Verizon Wireless is selling to Grain for $189 million -- those cover the Charlotte, Greensboro and Raleigh-Durham markets. AT&T also plans to sell to Grain an AWS license covering Dallas, which Verizon Wireless will then lease.

"The licenses at issue are for 700 MHz ‘beachfront’ spectrum, and Verizon and AT&T can use them (along with their other 700 MHz licenses) to fragment the market in a way that makes it difficult for smaller competitors to deploy devices on their smaller holdings,” PK said in a filing with the Writers Guild Of America, West. “This has several negative effects. It makes it harder for users to switch carriers, since even without any form of deliberate locking they will not be able to take their equipment with them. It means that low-cost equipment will only be available with larger carriers who can create the incentive for equipment makers to create devices that work with their networks. And it means that smaller carriers may have difficulty even using the licenses they have purchased -- keeping spectrum underused, and networks undeveloped through no fault of their own."

"To promote competition in an already concentrated wireless market, the Commission should deny this proposed spectrum swap altogether, and require Verizon to transfer all of its remaining Lower 700 MHz A and B Block licenses to someone other than AT&T, which already has significant Lower 700 MHz holdings,” Dish said (http://bit.ly/12qj6zg).

CCA pressed the FCC to finalize a broader rulemaking requiring device interoperability for the lower 700 MHz band. If not, the FCC should impose a requirement on the spectrum that is part of the transaction, CCA said. Today, “AT&T and Verizon are duopolists in the marketplace by almost every conceivable measure,” CCA said (http://bit.ly/YAr35y). “Of the approximately 332 million wireless subscribers in America, Verizon accounts for over 113 million, AT&T almost 106 million, and every other competitive wireless carrier (of which there are well over a hundred) serve the remaining 103 million."

"AT&T and Verizon have used their dominant spectrum positions to block competition and prevent other carriers from accessing critical inputs such as spectrum and iconic devices,” CCA President Steve Berry said in a news release. “Allowing the two largest carriers to trade off spectrum -- while at the same time not acting to restore interoperability in the Lower 700 MHz -- only further harms competition and consumer choice."

The Rural Telecommunications Group said the FCC should require divestitures or other pro-competitive conditions where appropriate if it approves the deal. “Post-transaction, when viewed together, AT&T and Verizon Wireless will hold excessive amounts of spectrum in over 50 [Cellular Market Areas] across the country covering nearly 200 counties,” RTG said (http://bit.ly/ZcGs7O). “If the FCC were to approve the proposed transaction, it is questionable whether those impacted CMAs could support even three healthy carriers (i.e., each with enough spectrum resources to remain viable), much less four.”