Verizon Filing Says SpectrumCo Deal is Just a License Transfer

"The transaction will move spectrum that is not currently being used to serve consumers to a provider that will make efficient use of that spectrum to serve the public,” Verizon said in a filing Monday. “The transaction will enable Verizon Wireless to add network capacity to meet growing demand, so that customers will continue to enjoy the high-quality, high-speed services that state-of-the-art wireless broadband technology can provide.”

Verizon said the deal is a license transfer, nothing more, and should not raise the same issues as a merger. The filing does not specifically mention AT&T/T-Mobile. “Unlike a merger or other transaction involving consolidation of operating businesses and customers, the only assets being transferred are AWS licenses that are not currently in commercial use,” the filing said. “The transaction will not combine the Applicants’ businesses, does not involve the acquisition of any non-spectrum assets, facilities, or customers, and will not reduce the number of choices for wireless services that consumers have in each of the licensed areas.”

The FCC should perform only a minimal review given the nature of the transaction, Verizon said: “The Commission previously has determined that applications which demonstrate on their face that a transaction meets the public interest, and will neither violate the Act or Commission rules, nor undermine Commission policies, do not require extensive review or merit expenditures of scarce Commission resources.” Verizon said even with the SpectrumCo purchase, given the explosion in the use of smartphones and data traffic, the company will need additional spectrum over the long term. “The mix of devices is shifting toward more bandwidth-intensive smartphones and other broadband-capable devices, driving even more data usage,” the filing said. “Verizon Wireless has thus strongly supported the Government’s target of identifying and licensing 500 MHz of additional spectrum over the next ten years,” the filing said.

Verizon’s filing “raises more questions than it answers,” said Free press Policy Director Matt Wood. “Verizon Wireless and its newfound cable allies should stop hiding the ball,” Wood said. “Today’s filing provides some more details on the license deal that would strengthen the hand of what is already the nation’s largest wireless provider. But the document sheds no light on the joint marketing deals that Verizon Wireless is forging with the cable cartel. There may be provisions within these deals that would reduce the participating companies’ incentive to compete with one another, as they work to resell each others’ products rather than rolling out their own services and battling for customers.”

The FCC should ask tough questions when it considers the deal, said Media Access Project Senior Vice President Andrew Schwartzman. “No matter how forcefully Verizon claims that this is ‘a spectrum only transaction,’ it is much more than that,” Schwartzman said. “The FCC’s mandate is to look at the totality of the circumstances to decide if a proposed transfer is in the public interest. This one raises serious questions about the state of competition in both the wireless and video markets.” Public Knowledge Legal Director Harold Feld also urged the FCC to give the deal a close examination. “It is critical that the FCC be prepared to act if the application and the agreements raise the possibility of anti-competitive coordination,” Feld said. “While it is important to get spectrum into productive use, the possibility that this may create ‘backdoor’ channels by which competitors may divide the market and keep out potential new entrants is very real. The FCC has authority to insist on reviewing the associated agreements, whatever the parties may say.”

The Rural Cellular Association has major reservations about the SpectrumCo deal, said President Steve Berry. “The proposed spectrum sale would exacerbate the current difficulties competitive carriers have seeking data roaming agreements, obtaining devices, and entering the marketplace.” he said. “Verizon Wireless and SpectrumCo recognized these challenges in their filing, but fail to suggest common-sense solutions that would ensure the transfer would inure to the public interest.”