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Verizon, T-Mobile deal not a fix, say opponents

Tue, 06/26/2012 - 2:30pm
Maisie Ramsay, Wireless Week

Challengers to Verizon Wireless' purchase of nationwide AWS spectrum say the operator's agreement to swap spectrum with T-Mobile USA won't fix the competitive harms of the transaction.

The reaction comes after T-Mobile, a vocal critic of Verizon's AWS acquisition, said Monday it would swap or sell spectrum with its competitor in 218 markets.

Since the arrangement is contingent upon FCC approval of the AWS transaction between Verizon and four cable operators, it effectively ended T-Mobile's opposition to the deal.

The de facto truce between T-Mobile and Verizon could mark a setback for groups opposed to the AWS transaction, as T-Mobile was one of the most high-profile challengers to the deal. Those groups continued to express concerns about the transaction yesterday, urging the FCC to place limits on the deal in the face of the new agreement between T-Mobile and Verizon.

"That Verizon Wireless feels the need to buy off T-Mobile to close its spectrum/marketing deals with the country's largest cable operators underscores just how bad this deal really is for American consumers and competition generally," Public Knowledge senior vice president Harold Feld said.

The transfer of spectrum between the two operators "does nothing" to address "anti-competitive agreements and tools for future anti-competitive collusion," he said. Part of Public Knowledge's opposition to Verizon's AWS purchase stems from marketing agreements and a joint venture formed by the operator and its cable partners, deals the group says would stifle competition in the cable, Wi-Fi and backhaul markets.

The Rural Cellular Association (RCA) also voiced its reservations. T-Mobile, a member of the RCA, "will certainly benefit from additional spectrum,” President and CEO Steve Berry said.

“However, this reaffirms our concern that Verizon Wireless will hold more spectrum than they currently plan to use, and some of their spectrum should go to competitive carriers,” he said.

Some critics of Verizon's AWS purchase, including the RCA, have asked the FCC to force Verizon to divest some of the licenses, a move which could have benefitted smaller providers. It is not clear whether those divestitures are off the table because of the arrangement between T-Mobile and Verizon, as Verizon has also offered to sell off some of its 700 MHz A-block and B-block.

T-Mobile is "more than willing to discuss with other competitive carriers the possibility of access to certain blocks of the spectrum,” Berry said.

The Communications Workers of America (CWA) was blunt in its criticism.

"The threat of job loss and higher consumer prices from the proposed Verizon Wireless-Big Cable deal remains, even if today's announcement resolves some of the FCC's concerns about one piece of the agreement," CWA telecommunications policy director Debbie Goldman said.

The marketing deals between Verizon and the cable operators it is buying spectrum from allow them to cross-sell each other's products, "thereby eliminating competition, killing or preventing the creation of thousands of jobs, widening the digital divide between cities and wealthy suburbs, reducing consumer choice and raising prices," CWA said. Verizon and its CWA union workers have been at odds over job cuts in the operator's landline division.

The transfer of spectrum to T-Mobile could help Verizon close the AWS transaction by late summer, as expected. The FCC is still reviewing the deal.

T-Mobile plans to use the spectrum it is acquiring from Verizon for its LTE network. The licenses cover 60 million people in top metropolitan areas including Philadelphia and Washington, D.C. In exchange, Verizon will get spectrum covering 22 million people and an unspecified "cash consideration."

The two companies have also agreed to spectrum swaps in a number of markets "to create more contiguous blocks of spectrum and realign spectrum in adjacent markets."

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