Verizon: 36 buyers interested in our 700 MHz spectrum

Verizon Wireless (NYSE:VZ) has so far attracted interest from 36 potential buyers for its 700 MHz Lower A and B Block spectrum, according to the carrier.

Verizon made the disclosure in a letter dated May 22 it sent to the FCC. The carrier said 36 entities have signed non-disclosure agreements over the proposed sale. The disclosure was part of a larger accounting of the planned sale Verizon gave to the FCC following the commission's request for more information.

Importantly, Verizon has said the sale of its Lower A and B Block spectrum is contingent on the carrier getting regulatory approval to buy more attractive nationwide AWS spectrum from cable companies. The FCC had asked Verizon to explain what steps it has taken to build out the 700 MHz spectrum, what difficulties exist in deploying that spectrum, why the 700 MHz sale is relevant to a review of the AWS spectrum purchases and what Verizon would do if the entirety of the AWS purchases were not approved.

In its response, Verizon said that it has taken a number of steps to prepare to use its Lower And B Block spectrum, "including RF system design, site construction planning, and discussions with vendors. In all markets covered by these licenses, three phases of the initial RF system design have been completed: identifying cell sites for development, selecting configurations of antennas, and determining center height requirements for the antennas." Verizon said it has also "communicated with equipment vendors about procuring both devices and network equipment that will operate on" the spectrum.

The nation's largest carrier also matter-of-factly stated what has been a general consensus among analysts since the proposed 700 MHz sale was announced: that AWS spectrum is better spectrum and is more complementary to Verizon's existing spectrum holdings. Verizon noted the technical challenges associated with making its devices work for both the Lower 700 MHz spectrum and the Upper C Block, which it is currently using to deploy LTE to around two-thirds of the U.S. population. Verizon also noted the interference concerns between the A Block and Channel 51 broadcast spectrum.

Verizon also took aim at its critics, including T-Mobile USA and the Rural Cellular Association, which have accused it of hoarding spectrum. "The sale of the Lower 700 MHz licenses also further undercuts the meritless 'warehousing' claims by several of our competitors," Verizon said. "In response to the license assignment applications in this proceeding, these parties argue that Verizon Wireless should not be allowed to acquire AWS spectrum because it is 'warehousing' what they describe as beachfront Lower 700 MHz spectrum in order to keep other wireless providers from using it. The fact that Verizon Wireless has announced a public sale process for the Lower 700 MHz spectrum if the AWS transactions are approved conclusively refutes those claims."

The filing contains numerous portions that have been redacted for public viewing, including sections detailing the efforts Verizon has undertaken since 2009 to sell its Lower A and B Block spectrum. Verizon indicated that after discussions it held in February and March with unnamed parties it determined that there was enough interest in the spectrum to warrant a sale. The company said that if the FCC does not approve its AWS purchases, Verizon "would have re-assess all available options to meet its customers' needs."

In response, the Alliance for Broadband Competition, a group backed by T-Mobile and the RCA and supported by Sprint Nextel (NYSE:S), said that Verizon's "math simply doesn't add up."

"In the letter, Verizon fails to mention that the spectrum licenses it seeks to purchase from the cable companies cover the entire nation, while the lower MHz holdings provide only incomplete coverage," the group said. "The spectrum Verizon is so willing to offload requires costly upgrades by 2013. The spectrum from the cable companies does not. The FCC must consider these transactions accordingly, which is to comprehensively assess their impact on the entire mobile industry, and not simply facilitate horse trading between the Twin Bells."

U.S. Cellular has indicated in a regulatory filing that it is interested in buying Verizon's 700 MHz spectrum (it already owns some A Block spectrum), but has 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.

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.

For more:
- see this FCC filing (PDF)

Related Articles:
Verizon hires Loop Capital to help with planned 700 MHz spectrum sale
FCC presses Verizon for details on proposed 700 MHz spectrum sale
T-Mobile, RCA join forces to stop Verizon's cable deals
U.S. Cellular interested in buying Verizon's 700 MHz spectrum
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