The FCC on Thursday asked Verizon Wireless (NYSE:VZ) and several cable companies to provide more details on Verizon's planned $3.9 billion purchase of AWS spectrum from cable companies and the establishment of cross-selling deals between the firms.
Sprint Nextel (NYSE:S), T-Mobile USA, MetroPCS (NASDAQ:PCS), DirecTV and several public interest groups have been pressing the FCC for weeks to get Verizon and the cable companies--Comcast, Time Warner Cable and Bright House Networks of SpectrumCo as well as Cox Communications--to divulge more specific details about their deals to sell each other's services.
Verizon and the cable companies have argued that the deals have no bearing on the review of the spectrum license transfers, and that revealing the details would harm them competitively. The entities opposing them have said the public interest benefits of the deals cannot be properly evaluated without more information. Verizon and the cable companies have submitted confidential material to the Department of Justice and FCC, but their public filings have had large sections of data redacted. Now the FCC has asked all of the companies involved to submit more information that has been redacted.
FCC spokesman Neil Grace said in a statement that the commission "has concluded that portions of the commercial agreements are inseparable from the proposed license transfer and related wireless competition issues."
Interestingly, in its request for more information from Verizon, the FCC also is looking for information on Verizon's expectations for data traffic on its network. Specifically, the agency asked Verizon to provide more details on its expectations for data traffic growth rates over the next few years; all of Verizon's plans and analyses for the migration of CDMA customers to LTE; and a detailed explanation of why Verizon expects to reach its capacity limits on its LTE network starting in 2013 in some areas and in many more areas in 2015. The FCC also wants more details on how Verizon plans to use its current 700 MHz and AWS spectrum holdings.
In a recent FCC filing, Bill Stone, Verizon's executive director of network strategy, said that Verizon's current spectrum holdings "will not provide sufficient capacity to meet the growing demand for mobile broadband--4G, in particular--by 2013 in some areas and by 2015 in many more." Only around 5 percent of Verizon's customer base currently uses LTE services, but the company is rapidly trying to migrate as many customers to LTE as possible.
"Our usage projections suggest that traffic on our LTE network will surpass data usage on our EV-DO network in early 2013," Verizon's Stone stated. "By year-end 2015 our LTE data traffic is projected to be 5 times the peak data traffic ever carried on our 3G EV-DO network. The impact of that growth rate compounds, resulting in a more than 20-fold increase in LTE data traffic from year-end 2011 to year-end 2015."
In response to the FCC's request for more data, Verizon said that it believes "getting previously unused spectrum into the hands of consumers is strongly in the public interest. We will continue to respond completely and rapidly to the questions about both the spectrum transfer and the separate cross-marketing agreements at the FCC and DOJ, thereby demonstrating the benefits they bring to consumers. We anticipate that the process being pursued by the FCC will result in a positive conclusion within the 180-day period set for consideration of the transfer of the spectrum licenses."
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