T-Mobile and RCA gang up against Verizon-cable deal
Create formal coalition with other interest groups to step up pressure against the sale of AWS spectrum to Verizon
Published: 15 May, 2012
Opponents of Verizon's proposed spectrum purchase from four cable operators have formalized their alliance against the deal. T-Mobile USA, the Rural Cellular Association (RCA) and public interest group Public Knowledge are joining forces to spearhead the campaign against the $3.9bn transaction.
The trio will form a new formal group, called the Alliance for Broadband Competition, which describes itself as a "collection of like-minded businesses, trade associations, and public interest groups who are concerned about the ability for the current marketplace to sustain a competitive broadband landscape."
When Verizon first announced its agreement to buy AWS spectrum from Comcast, Time Warner Cable and BrightHouse, (and later, in a separate deal, Cox), the plan was expected to gain regulatory approval without much trouble. However, in the fall-out from AT&T's failed acquisition of T-Mobile, the regulators have become sensitive to claims that too much power is being concentrated in the hands of the big two operators, and Verizon's plans have met with significant opposition. The FCC and Department of Justice recently extended the review period by 21 days and, while most observers still expect the deal to go through eventually, the carrier may have to make significant concessions such as spectrum divestments.
Sprint has been more muted than TMo in its opposition - it has asked the FCC to scrutinize the plan closely but has not officially called for the plan to be blocked. It supports the new coalition but will not join its initial teleconference, it said.
TMo and the RCA have marshalled various arguments against the Verizon deal, claiming it will damage competition - especially as it comes with a related cross-marketing agreement for the firm's broadband and content services; that the telco will stockpile the spectrum rather than building it out; and that Verizon does not even need additional 4G frequencies yet (TMo claims it is using its own spectrum up to 50% more efficiently). For its part, Verizon has rebutted the claims and offered to sell its holdings in the Lower 700MHz A and B blocks (its national LTE network is in a different block, which does not interoperate with these bands).
TMo could be a candidate to acquire any offloaded 700MHz spectrum, but is far more interested in more AWS assets coming to market, since it is building its own LTE network in that band, while moving its HSPA+ services to the PCS spectrum. Even smaller operators have been lukewarm about the A and B block holdings, although an exception is US Cellular, which said in a recent FCC filing that it was interested in the assets. CEO Mary Dillon met FCC chairman Julius Genachowski on May 8 and told him the proposed sale could benefit other carriers which own licences in Band Class 12 of the 700MHz band, which include C Spire Wireless and other regional and rural players. She also supported the idea of AT&T acquiring the licences, provided it supported the Band Class 12 ecosystem, giving it greater scale. Carriers in these frequencies have complained that it is hard to source attractive devices because of the fragmentation of the spectrum, and have called for the FCC to make roaming across the whole band, including Verizon's and AT&T's networks, to be made mandatory.