Verizon has its own FCC battle now

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Verizon has its own FCC battle now

AT&T said to be considering MetroPCS tie-up even as its arch-rival looks for approval for its three spectrum purchases

By CAROLINE GABRIEL

Published: 3 January, 2012

READ MORE: Spectrum | US | Verizon Wireless | Infrastructure | LTE

AT&T's bid for T-Mobile USA may have collapsed just before the holiday, but there is still plenty of action in the US market as the carriers scramble for LTE spectrum and customers. Verizon Wireless, have enjoyed almost a full year as the unchallenged 4G king, ended 2011 with some unfamiliar bad news - a string of outages in December, which it blamed on "growing pains" in its LTE systems; and a study by Metrico which claimed AT&T's new (and lightly loaded) 4G network was 30% faster than its rival's. However, if Verizon's string of spectrum deals, announced late last year, are approved, it will certainly have a far stronger position than AT&T to expand capacity once both cellcos' current holdings run dry around 2015.

That makes a rapid, and positive, FCC ruling on Verizon's deals with SpectrumCo, Cox and Leap essential, while AT&T is still assessing its back-up plan. The latter has finalized its purchase of Qualcomm's 700MHz licences, which will give it incremental downlink capacity, and managed to persuade the FCC not to impose onerous terms and conditions, as AT&T backers had feared before Christmas. But this small victory will address only a fraction of AT&T's likely spectrum requirements by mid-decade, and it is now reported to be considering a more limited network/frequency sharing venture with TMo, or an alliance with MetroPCS and/or Leap.

In a new research note, JPMorgan speculated that AT&T may go after the two prepaid carriers, both of which have begun LTE roll-outs. MetroPCS was the first to launch commercial services, while Leap began its own switch-on over the holiday, but neither has sufficient spectrum or reach to go it alone. They are expected to work with partners such as LightSquared, and to extend their existing mutual roaming deal in CDMA - moves which could create a credible competitor to the big three (a point AT&T used to defend its planned absorption of the fourth national cellco).

Meanwhile, smaller carriers are calling for Verizon's three spectrum acquisitions to be considered by the regulators as a package, since their combined effect on the competitive landscape could be significant, even while each individual agreement looks relatively small in terms of the spectrum amounts involved. MetroPCS, Ntelos Holdings and the Rural Telecoms Group have led the campaign, echoing similar calls for AT&T's purchases of TMo and of Qualcomm's licences to be considered in tandem.

The latter demand went unmet, and is now irrelevant, but in Verizon's case, the FCC appears to have made some concession to this point of view. It said on Friday that it would adjust the deadline for filing comments on Verizon's recent spectrum deals so that all three shared a single timescale - though it added that this should not be seen as an attempt to link the consideration of the proposed transactions.

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