FCC approves Verizon's $3.9B AWS purchase, T-Mobile spectrum swap
As expected, the FCC approved Verizon Wireless' (NYSE:VZ) $3.9 billion purchase of 20 MHz of nationwide AWS spectrum from a group of cable companies, as well as related spectrum deals with T-Mobile USA and Cricket provider Leap Wireless (NASDAQ:LEAP). The FCC put several restrictions and conditions on the deals related to buildout requirements and data roaming.
All five of the FCC's commissioners voted to approve the deal, though the two Republican commissioners, Robert McDowell and Ajit Pai, disagreed with the data roaming elements of the order as well as the FCC's jurisdiction over the commercial deals between Verizon and the cable companies.
The broad outlines of the conditions the FCC imposed on Verizon were known last week but have now been finalized. Verizon has committed to serve 30 percent of the population covered by the AWS spectrum it is acquiring within three years and 70 percent within seven years.
Additionally, the FCC said that in the event its current data roaming rule is not available to requesting providers, Verizon will offer data roaming on the newly acquired AWS spectrum to other carriers on "commercially reasonable terms and conditions, and providers may negotiate the terms of their arrangements on an individualized basis." The data roaming commitment will remain in place for five years; previously, Verizon sued the FCC in federal court to block similar data roaming rules, which the FCC approved in April 2011.
Separately, Verizon and the cable companies--SpectrumCo, which is a joint venture of Comcast, Time Warner Cable and Bright House Networks, and Cox Communications--have agreed to a consent decree with the Justice Department to modify their commercial agreements.
Under the terms of a Department of Justice settlement, the cable companies will not be barred from selling the wireless services of Verizon's competitors, and may partner with other wireless providers; the cable companies can still act as MVNOs of Verizon's wireless service; and upon dissolution of the technology joint venture, all members will receive a non-exclusive license to all the joint venture's technology, and each may then choose to sub-license to other competitors.
"Because the commercial agreements are in the early stages of implementation and relate to evolving markets, however, the FCC is placing an independent reporting obligation on Verizon," the FCC said in a statement. "In addition, the FCC is opening a docket to allow the public to file complaints or petitions alleging that the parties are acting in violation of the conditions imposed by this order or engaging in anti-competitive conduct relating to this transaction."
Much of the opposition from within the wireless industry seemed to fade away in June after Verizon and T-Mobile USA announced a proposed AWS spectrum swap, which T-Mobile wanted because it is deploying LTE on AWS spectrum. The Rural Cellular Association, MetroPCS (NASDAQ:PCS) and public interest groups remained wary of the deal though. T-Mobile has argued that getting the AWS spectrum from Verizon--which will allow it to cover an additional 60 million people--will enable it to deploy LTE more robustly. Without the spectrum T-Mobile said it would have been limited to a 5x5 MHz LTE deployment.
Overall, Verizon's deal with the cable companies and its spectrum swap with T-Mobile have turned AWS into an essential LTE band for global roaming. AWS now sits alongside the 700 MHz band in terms of support among vendors, Ron Westfall, research director of service provider infrastructure at Current Analysis, told FierceBroadbandWireless.
Verizon wants to augment its existing 700 MHz LTE network with the AWS spectrum. Verizon had agreed to sell its 700 MHz Lower A and B Block spectrum if the AWS spectrum deal is approved. Verizon recently disclosed there are 64 companies that have expressed interest in buying its 700 MHz Lower A and B Block spectrum.
- see this release
- see this FCC order (PDF)
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