How likely is it that the Department of Justice will find anything wrong with Verizon's (NYSE:VZ) rather stealthy move to acquire nearly $4 billion worth of AWS spectrum from cable companies?
Verizon recently bought spectrum from SpectrumCo, a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks. Separately, Verizon said it will buy Cox Communication's 20 MHz of AWS spectrum covering 28 million POPs for $315 million. All of the deals include the option of Verizon reselling cable services and cable companies reselling Verizon service. Verizon grabbed that spectrum right under the nose of Sprint (NYSE:S), which had always been trying to make a go of partnerships with cable providers.
The DOJ wants to know if such a deal will harm competition in the cable and wireless markets. There is certainly hyper awareness when it comes to competition thanks to AT&T's (NYSE:T) failed $39-billion deal for T-Mobile USA. But I have a hard time believing this should raise a red flag in the wireless industry, at least.
For one, the spectrum has been lying fallow for many years as cable operators could never make up their mind what to do with it. Moreover, cable players are far from being powerhouses in the wireless industry. The cable industry has made varying attempts over the past two decades to gain a foothold in the wireless industry and build the elusive quad-play offering of cable, wireless, landline and Internet. So far these attempts--including reselling Clearwire's (NASDAQ:CLWR) WiMAX service--have had little success. Moreover, if Verizon can successfully coach these players in selling wireless, they will bring more competition to the wireless industry.
Interestingly, it becomes a delicate balance when it comes to spectrum, thanks to the failed AT&T deal with T-Mobile. The FCC on one hand is driving the message home that carriers need more spectrum to roll out mobile broadband services, while consumer advocates--who have gained much more clout thanks to AT&T and T-Mobile--and others concerned about competition will continue to cry foul.
On a personal note, as 2011 comes to a close so does my stint at FierceMarkets. I will be beginning a new journey as a senior analyst with Current Analysis starting in January.
The fine people at Fierce have granted me the privilege to write for various publications during the last six years, namely FierceWireless, FierceBroadbandWireless and FierceMobileIT. I have enjoyed learning from and arguing with so many of you.
I leave you in the very capable hands of veteran telecom reporters Dan O'Shea and Tammy Parker. Dan will be taking over for the month of January, with Tammy writing the issues beginning Feb. 1. FierceBroadbandWireless will be taking a break until Jan. 3. Happy Holidays!--Lynnette