Verizon pushes for spectrum ownership caps in Sprint's purchase of Clearwire

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Verizon Wireless (NYSE:VZ) pushed the FCC to apply its spectrum screen to Clearwire's (NASDAQ:CLWR) trove of 2.5 GHz spectrum while the agency reviews Sprint Nextel's (NYSE:S) proposed purchase of Clearwire. If the FCC does apply the screen to the deal, the agency could limit how much spectrum Sprint could ultimately acquire through its purchase of Clearwire.

In a filing with the FCC, Verizon argued the FCC should evaluate Clearwire's spectrum in the same way as spectrum in other bands. Sprint has argued that Clearwire's spectrum is above 2 GHz and so the FCC's spectrum screen--which is aimed at capping the amount of spectrum a single carrier can devote to mobile broadband--should not be applied to its purchase of Clearwire. But Verizon pointed out Clearwire is already using the spectrum, dubbed BRS/EBS, for mobile broadband.

"As the applicants themselves demonstrate, however, this spectrum is clearly both suitable and available for mobile services--and in fact it is already in use," Verizon wrote. "Indeed, they assert that control of the BRS/EBS spectrum will enable them to compete even more vigorously in the mobile services market. In short, in order to evaluate this transaction, the commission must include 133 MHz of BRS/EBS spectrum in its spectrum screen analysis, in addition to the other blocks of spectrum that are currently included in the screen."

Sprint's proposed acquisition of Clearwire is tied to Softbank's proposed purchase of 70 percent of Sprint for $20.1 billion. Verizon did not take a position on the Sprint/Softbank or Sprint/Clearwire deals, but made it clear that if the FCC approves the transactions it wants Clearwire's spectrum evaluated in the same way as other radio waves. Petitions to deny the deals were due Monday.

The FCC is currently evaluating its spectrum screen rules and has said that while that review is ongoing it will continue to apply its current case-by-case approach to evaluate mobile spectrum holdings. Verizon noted that when the FCC approved AT&T Mobility's (NYSE:T) purchase of 2.3 GHz WCS spectrum recently, it added 20 MHz of WCS to its spectrum screen because it had determined that WCS spectrum is "suitable and available for the provision of mobile telephony/broadband services" and "should therefore be added to the spectrum screen."

Verizon's push is not surprising. Both Verizon and AT&T made similar arguments to the FCC in November as part of the FCC's separate review of its spectrum screen rules. At the time, AT&T said the FCC should update the screen "to include all of the available spectrum that is 'suitable' for mobile wireless services," and specifically include spectrum that Clearwire controls when it makes that consideration.

Meanwhile, Sprint and Dish Network (NASDAQ: DISH) continue to skirmish at the FCC. Dish's unsolicited $3.30 per share counterbid for Clearwire may force Sprint to raise its $2.97 per share offer to match it. Dish has urged the FCC to halt its review of the deals while Clearwire's board considers Dish's offer. Sprint has said the FCC should not delay its review, arguing that the FCC "routinely processes transfer of control applications notwithstanding the existence of shareholder litigation or closing contingencies, such as the need for shareholder approval."

For more:
- see this Verizon FCC filing
- see this Dish FCC filing
- see this Sprint FCC filing
- see this Crest FCC filing

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