T-Mobile USA, MetroPCS (NASDAQ:PCS) and others urged the FCC to deny Verizon Wireless' (NYSE:VZ) $3.9 billion purchase of spectrum from cable companies and the establishment of cross-selling deals between Verizon and the cable firms. The Rural Cellular Association also expressed its opposition to the deals, saying there should be strict conditions on the deals if the FCC approves the spectrum transfers, and that absent those conditions the FCC should deny the deals.
The filings came amid of flurry of submissions to the FCC, which had set Tuesday as the deadline for interested parties to express their opposition to the deals. Other companies and entities, including Sprint Nextel (NYSE:S) and DirecTV, urged the FCC to carefully consider the effects the deals would have on market competition, in both the wireless and cable arenas. Sprint expressed particular concern about how the deals might affect data roaming and spectrum concentration.
In December Verizon agreed to pay $3.6 billion for the nationwide AWS spectrum licenses held by 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. The cable companies can also become MVNOs of Verizon. The FCC has consolidated the purchases into one review; the Department of Justice also needs to approve the deals. Further, a Senate committee on antitrust issues plans to hold a hearing on the deals.
T-Mobile said in its filings that the deals, if approved, will give Verizon access to even more spectrum for LTE than it already has and will shut out other entrants that want to launch LTE services. T-Mobile currently operates an HSPA+ network for mobile data and has said it does not have the spectrum necessary to launch LTE.
"Now, Verizon Wireless is seeking to acquire a substantial block of unused AWS spectrum that is unlikely to provide any near-term benefits to Verizon Wireless customers (indeed, the company already holds other AWS spectrum and has not even put it to use yet)," T-Mobile said in its filing. "Rather, the principal impact of the acquisition would be to foreclose the possibility that this spectrum could be acquired by smaller competitors--such as T-Mobile--who would use it more quickly, more intensively, and more efficiently than Verizon Wireless. The acquisitions will limit the deployment of LTE by competitors of Verizon Wireless and the bandwidth available for such deployments. If these transactions go forward, the end result will be less LTE capacity available overall and reduced competition in the provision of LTE, which would be contrary to the public interest."
MetroPCS said that the deals should not be approved because Verizon and the cable companies have not submitted information necessary to evaluate whether the deals are in the public interest. MetroPCS and other companies, including Sprint and T-Mobile, have argued that Verizon should divulge the details of its marketing arrangements with the cable companies.
Verizon and the cable companies have countered that the spectrum sale is in the public interest because the cable companies are not putting it to productive use. Further, they have argued in FCC filings that the marketing deals are outside of the FCC's purview and that publicly releasing the details would give competitors insight into their strategy.
The RCA, in its filing, said the FCC should investigate whether SpectrumCo was essentially a spectrum speculator after it bought its AWS spectrum and whether Verizon is warehousing spectrum. The RCA outlined several stipulations the FCC should impose if it does approve the transaction, including: requiring substantial divestitures of spectrum; requiring that Verizon provide favorable data roaming rates; and ensuring the special access market for backhaul is not curtailed.
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