T Mobile seeking to block Verizon spectrum purchase

At issue is spectrum purchased by Verizon from the cable companies in 2006

Author: Timothy Lee

Verizon Wireless
Verizon Wireless has been on a spectrum buying campaign since 2006, buying up spectrum from Comcast, Time Warner Cable, and Cox Communications.
The nation's fourth-largest cellular firm has asked the Federal Communications Commission to block a spectrum acquisition by its largest competitor. T-Mobile argues that allowing Verizon to purchase more spectrum would make it too difficult for smaller wireless firms to build next-generation networks of their own.

The spectrum under dispute was acquired in an auction by a coalition of cable companies led by Comcast and Time Warner in 2006. But the cable firms have apparently decided they don't want to be in the wireless business after all. In December, Verizon Wireless announced plans to buy the spectrum, which is in the AWS band, for $3.6 billion.

But T-Mobile objects, arguing that "smaller competitors"-e.g., T-Mobile-"do not have excess spectrum in which to first warehouse bandwidth and later deploy LTE," the next-generation wireless standard. "With current spectrum holdings, their effort to deploy LTE is more complicated, costly, and time consuming," T-Mobile argues.

T-Mobile thinks the spectrum should be reserved for the use of smaller competitors, who would "use it more quickly, more intensively, and more efficiently."

The FCC uses a procedure called a "spectrum screen" to decide whether any single firm holds too large a fraction of the spectrum in any specific market. The Verizon-Comcast transaction will likely pass muster under the screen, but T-Mobile argues that the FCC's current rules are out of step with technical reality.

In particular, T-Mobile argues that the current formula does not take into account the fact that the lower-frequency spectrum that Verizon disproportionately holds is more useful than higher-frequency spectrum that T-Mobile itself owns. T-Mobile advocates that the FCC weight spectrum holdings by their market value, rather than treating every megahertz as equally valuable.

T-Mobile also argues that spectrum reserved for public safety use should not be included in the denominator of the FCC's calculations, since these frequencies are not available for use by private wireless companies.

The firm also complains that "Verizon Wireless signed this deal while the AT&T/T-Mobile transaction was still pending, so that T-Mobile was unable to compete to purchase this spectrum."

Verizon's deal with Comcast and Time-Warner is not the only pending spectrum purchase. The nation's leading wireless carrier is also in the process of purchasing a smaller slice of spectrum from Cox Communications, another cable company looking to get out of the wireless business. That deal is valued at a relatively paltry $315 million.


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