Verizon says Dish ‘wrong on the facts’ in XO transaction

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The battle between Verizon and Dish Network over Verizon’s attempts to acquire XO Communications for $1.8 billion is as alive as ever, as the two companies continue to try to convince the FCC that the other party is wrong.

Dish has argued that the proposed acquisition of XO will decrease investment and competition in the industry and that the claimed benefits of the transaction are either speculative or not transaction-specific, to which Verizon says Dish is “wrong on both scores.”

Dish raised concerns about the transaction soon after it was proposed in February, saying it would give Verizon an unfair advantage by giving it control of Nextlink’s Local Multipoint Distribution Service (LMDS) and 39 GHz spectrum as well as XO’s fiber network, resources that promise to play central roles in 5G and will be important to companies competing against Verizon in the commercial 5G space. Dish also raised concerns that the transaction would eliminate competition between Verizon and XO in the mobile backhaul business.

RELATED: Dish warns key 5G spectrum 'will be controlled almost exclusively by Verizon' if XO deal approved

While the transaction calls for buying XO's substantial fiber-optic network, which covers 40 major U.S. markets through 1.2 million fiber miles, the purchase of XO would also enable Verizon to lease XO's LMDS spectrum with an option to buy it before the end of 2018. XO has 102 LMDS licenses in the 28 GHz and 39 GHz bands, which are prime bands for 5G millimeter wave tests and trials in the U.S.

RELATED: Verizon confirms XO spectrum in 28 GHz and 39 GHz bands will be used in 5G tests

Interestingly, in its arguments, Verizon points to previous FCC decisions where the commission has held that “cost savings and network efficiencies resulting from avoiding duplicative infrastructure investment can serve as important public interest benefits that support approval of transactions.” Namely, it references a 2013 case involving Alaska Wireless Network, where the elimination of redundant CDMA network facilities was deemed reasonable given CDMA network overlap in a deal with GCI. Another example it cites is Sprint’s takeover of Nextel assets, where it was deemed a “capital investment required for a wireless carrier to deploy a next generation network” as a capital expense that Nextel will be able to avoid as a result of the transaction.

“DISH’s contention that the benefits of the transaction are either speculative or not transaction-specific is equally unavailing,” Verizon said in its Oct. 27 filing (PDF). “For example, Verizon submitted a declaration explaining in detail that Verizon will utilize XO’s fiber assets to expand 4G and deploy upcoming 5G services more quickly and efficiently than if Verizon were to build redundant fiber or attempt to lease it from a third party. That declaration provides specific examples of how XO’s fiber will enable faster and more extensive network densification for both 4G and 5G and will allow Verizon to expand its 5G test footprint – clear, tangible transaction-specific benefits.”

For its part, Dish has argued that the applicants have not explained why or how Verizon will be a better steward of the assets than XO, and it asserts that the elimination of XO would halt an aggressive expansion and extinguish competition that would have occurred between XO and its competitors, including Verizon.

RELATED: Verizon's XO deal raises more concerns around number portability, backhaul and spectrum hoarding

Earlier this year, public interest groups and smaller wireless carriers started voicing a number of concerns about Verizon's proposed acquisition of XO’s fiber business and its related deal to lease LMDS spectrum. Public Knowledge, the Competitive Carriers Association and others urged the FCC to carefully evaluate the transaction and its possible effects on Verizon's competitors and the overall telecommunications marketplace.

More recently, Public Knowledge and New America’s Open Technology Institute submitted a filing in mid-October saying that Verizon’s planned takeover of XO will reduce competition in already concentrated markets, and they urged the commission to reject the deal.