Verizon says FCC can't ignore Sprint's 2.5 GHz licenses in spectrum screen
Verizon Wireless (NYSE:VZ) took Sprint (NYSE:S) to task over the fact that the vast trove of 2.5 GHz spectrum Sprint acquired from Clearwire last year is not currently included in the FCC's "spectrum screen." If the spectrum were included, Verizon argues, Sprint would be counted as having more spectrum than any other carrier.
Verizon's arguments, made in a recent FCC filing, are not new, and they are part of what has been an ongoing debate between the wireless carriers--largely with Verizon and AT&T Mobility (NYSE:T) on one side and Sprint and T-Mobile US (NYSE:TMUS) on the other. The debate centers on whether the FCC should redesign its spectrum screen, which the commission uses when reviewing spectrum transactions. If a carrier acquires too much spectrum and violates the screen, the deal is more closely scrutinized. Currently, the screen is different for each proposed transaction. Such a screen could have significant implications for the FCC's upcoming spectrum auctions.
In its filing, Verizon wrote that the "biggest defect" in the current screen is that "it omits 138 MHz of 2.5 GHz Broadband Radio Service and Educational Broadband Service spectrum, most of which is held by Sprint itself. That means that the current screen counts only 452 MHz in total of spectrum suitable and available for commercial mobile services. Omitting Sprint's 2.5 GHz spectrum (as well as Dish's AWS-4 spectrum) makes the screen seriously inaccurate--it counts barely more than 70 percent of the spectrum that should count."
Sprint operates more than LTE 5,000 cell sites on its 2.5 GHz spectrum, and plans to expand its 2.5 GHz LTE coverage to 100 million POPs by year-end as part of its tri-band "Sprint Spark" LTE service. Sprint has said it owns around 120 MHz of 2.5 GHz spectrum in 90 percent of the top 100 U.S. markets.
"As we have stated many time s before, the omission of so much of Sprint's 2.5 GHz spectrum is particularly egregious because Sprint is relying on its 'strong spectrum position' in the 2.5 GHz band to deploy its 4G LTE mobile broadband network," Verizon wrote.
Sprint has argued that the FCC needs to weight the screen differently by making spectrum below 1 GHz count more than spectrum above that threshold. Verizon and AT&T control the lion's share of sub-1 GHz airwaves. Lower band spectrum generally transmits wireless signals farther.
Yet Verizon argues that, when counting the 2.5 GHz airwaves Sprint controls, "Sprint has, on average, nearly twice as much spectrum as Verizon Wireless, and it is using that spectrum to serve customers. It is also the case, moreover, that Sprint is the least efficient of the four national carriers, serving fewer customers per MHz of spectrum than AT&T, Verizon Wireless, or T-Mobile. Yet, ironically, it is Sprint that continues to lobby for limits on the ability of other carriers to acquire additional spectrum resources."
"Tellingly, Sprint does not explain how a weighted screen could be implemented or justified," Verizon wrote. "Not only does it concede that lower and higher frequency bands each have advantages, but those advantages vary enormously depending on factors such as the area where spectrum is used, a carrier's other spectrum holdings, and its business need to expand capacity, coverage, or both. And differences in values among spectrum bands are not (as Sprint assumes) merely based on frequency, but are affected by interference from operations in other spectrum bands, protection zones, and technical rules that may restrict use."
A Sprint spokesman did not immediately respond to a request for comment.
The FCC is devising rules for the incentive auctions next year of 600 MHz broadcast TV spectrum. Sprint and T-Mobile have argued that because of their spectrum holdings below 1 GHz, the FCC should set caps on how much 600 MHz spectrum Verizon and AT&T can purchase in the auctions. Verizon and AT&T have argued strenuously against such restrictions.
If Sprint's 2.5 GHz spectrum is included in the spectrum screen, that might undercut its argument, since Sprint would be counted as having much larger spectrum holdings than it officially does now as part of the FCC's screen. Both Sprint and T-Mobile have argued though that the unique characteristics of low-band spectrum, including its strong propagation characteristics, elevate its importance and demonstrate why Verizon and AT&T should not be allowed to gobble up as much of it as they can.
- see this Verizon FCC filing
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