Critics Pan Verizon's Proposed Spectrum Sell-off

Resale of Verizon Wireless's 700 MHz licenses could sway regulators to sign off on carrier's proposed partnership with cable companies, but plenty of groups are crying foul.

By Kenneth Corbin
Thu, April 19, 2012

CIO — Critics of all stripes gave a cool reception to the plan Verizon Wireless announced on Wednesday to sell off a portion of its spectrum holdings in the coveted 700 MHz band, provided that federal regulators approve the carrier's proposed deal with leading cable companies to purchase a set of spectrum licenses and forge a marketing partnership.

Under the new proposal, Verizon would sell off its licenses in the A and B blocks of the 700 MHz band if the cable deal clears regulatory review. Under that arrangement, Verizon would acquire an array of so-called Advanced Wireless Services (AWS) spectrum licenses from a group of cable operators, which it would combine with its 700 MHz C block holdings to build out its nationwide 4G wireless network.

The Department of Justice and the Federal Communications Commission are currently reviewing Verizon's proposed spectrum transactions with SpectrumCo, a joint venture of Comcast, Time Warner Cable and Bright House Networks, and Cox and Leap Wireless, a process the carrier said it expects to conclude around the middle of this summer. Since the FCC and the White House have thrown their weight behind policies to free up spectrum for mobile broadband, and the 700 MHz spectrum Verizon is proposing to sell is often referred to as "beachfront property" for its strong propagation characteristics, the new proposal could sway regulators to sign off on the cable deal.

"We believe the move should facilitate Verizon Wireless winning DoJ and FCC approval of the AWS spectrum transaction, which we already had thought was likely," said Christopher King, an analyst with Stifel Nicolaus. "By putting its 700 MHz band lower A and B block licenses on sale, Verizon could ease potential regulatory concerns about its concentration of spectrum holdings, though there could be concerns that AT&T would be the main buyer."

Verizon acquired the A and B block regional licenses that it is now proposing to resell in the DTV auction the FCC held in 2008 to shift spectrum that had been used for analog television transmissions to advanced wireless deployments.

Verizon billed the proposed sale as an effort to "rationalize" its spectrum holdings, but representatives of television broadcasters and small carriers were quick to accuse the nation's largest carrier of hoarding spectrum while at the same time lobbying federal authorities to make more of the airwaves available under the pretense of scarcity.

"Today's proposal by Verizon to sell reallocated broadcast TV spectrum involves airwaves in the largest urban markets in America that it purchased more than four years ago," Dennis Wharton, executive vice president of communications for the National Association of Broadcasters, said in a statement. "The fact that it has warehoused this 'beachfront property' raises the fundamental question of whether a spectrum shortage actually exists."

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