U.S. Cellular is interested in buying Verizon Wireless' (NYSE:VZ) 700 MHz Lower A and B Block spectrum, according to an FCC filing. U.S. Cellular did not indicate how much it would be willing to pay for the spectrum but said the sale could be beneficial to the industry.
According to the filing, which was posted to the FCC's website Friday, U.S. Cellular CEO Mary Dillon met with FCC Chairman Julius Genachowski on May 8. At the meeting Dillon and other U.S. Cellular executives, including CTO Michael Irizarry, said the proposed sale could benefit other carriers that own licenses in Band Class 12 of the 700 MHz band, which include C Spire Wireless and others. Verizon has proposed selling the spectrum if it gets regulatory approval of its purchase of AWS spectrum from a group of cable companies.
Interestingly, the U.S. Cellular executives also supported the idea of AT&T (NYSE:T) purchasing the spectrum, as long as AT&T supported the Band Class 12 ecosystem. The carrier also said it would support Verizon simply building out a network using the spectrum (Verizon's current LTE network uses its 700 MHz Upper C Block spectrum).
Importantly, U.S. Cellular executives said the sale did not override the need for the FCC to issue interoperability requirements for the lower 700 MHz band. Such a mandate would require carriers to sell phones that support multiple 700 MHz bands, not just the bands they own licenses in.
The lower 700 MHz interoperability issue speaks to the problems caused by the fragmented nature of the 700 MHz band. U.S. Cellular said in its filing that its representatives have spoken with AT&T and Verizon about possible voluntary industry efforts to create interoperability, but that it is doubtful such efforts will bear fruit "in a reasonable time frame to move the LTE ecosystem forward absent regulatory intervention."
The FCC initiated a rulemaking on lower 700 MHz interoperability in March and has been taking comments on the issue. The 700 MHz interoperability rulemaking will primarily look at a very technical issue: the potential for harmful interference to Lower 700 MHz B and C Block operations if the Lower 700 MHz Band were interoperable and whether, if such interference exists, it can be reasonably mitigated.
AT&T and Verizon have argued against a mandate for 700 MHz interoperability. They contend that the government has no authority to create such a stipulation, that there are technical reasons against such a requirement, and that a 700 MHz interoperability mandate would create burdensome development costs that would slow the rollout of LTE. AT&T, in particular, has argued that high power broadcasts that are permitted in Channel 51 and in the lower E Block create the potential for significant interference in the lower A Block. Additionally, the Lower A Block licensees purchased their spectrum for far less in the 2008 auction than AT&T and Verizon did, in part because it was known that these interference concerns existed, and some have argued that mandating interoperability would give a windfall to the Lower A Block companies.
For its part, in its filing U.S. Cellular noted that "industry sponsored engineering testing is underway that we believe will rebut the alleged interference claims in the Band Class 12 devices currently deployed by U.S. Cellular. Those deployments include Band 12 devices already deployed in markets where Channel 51 operations exist and where we are not experiencing customer impacting interference in the B Block as some have claimed theoretically would be present. We anticipate submitting those results for the record in the interoperability proceeding."
- see this FCC filing
T-Mobile's Ray: We're not interested in Verizon's 700 MHz spectrum
Analysis: AT&T, MetroPCS might purchase Verizon's 700 MHz spectrum
FCC moves forward on 700 MHz interoperability and MSS spectrum rules
T-Mobile: All 700 MHz LTE networks should interoperate