Verizon, Cable Companies Slam T-Mobile Complaints

"T-Mobile dedicates much of its advocacy to its own claimed spectrum needs, as if this assignment proceeding were a comparative hearing to determine which of several applicants should be awarded the AWS spectrum,” Verizon and the four cable companies said (http://xrl.us/bnbhpb). “T-Mobile’s laments may be probative of the facts that T-Mobile and its parent Deutsche Telekom decided to exit the market rather than invest and that they decided to sit out the 700 MHz auction -- while Verizon Wireless continued to invest some $18 billion over the last three years, half of which was devoted to increasing the capacity of its existing network.” T-Mobile’s objections are “irrelevant to the issue here, as the Commission’s task is not to undo the effects of T-Mobile and Deutsche Telekom’s prior business decisions and it is statutorily barred from considering alternative transactions,” the filing said.

"T-Mobile USA stands by the substantive, detailed analysis compiled by Dennis Roberson and filed with the FCC on May 30,” T-Mobile spokesman said in response to the filing. “Indeed, facts are stubborn things, as is demonstrated in the Roberson analysis, clearly showing that Verizon is the least spectrally efficient of the four nationwide carriers."

Meanwhile, some critics of the Verizon/cable deals say they consider approval likely. Verizon Wireless agreed in December to pay about $3.6 billion for 122 AWS licenses from SpectrumCo, a venture of Bright House Networks, Comcast and Time Warner Cable, and to pay another $315 million for another 30 AWS licenses from Cox Communications. Verizon and the cable operators also announced they had signed marketing and other side agreements that have also proved a target of critics.

Public Knowledge Legal Director Harold Feld wouldn’t be surprised if the deals are approved. “Everyone ... knew this was going to be a tough haul, given that it did not include a transfer of customers the way AT&T/T-Mobile did,” he said. “Given that the FCC has designated only two license transfers for hearing in the last 10 years, the growing consensus that staff will recommend approval is generally regarded in the public interest community as ‘disappointing but not surprising.'” The key is that DOJ and the FCC “adequately address concerns with regard to coordinated anti-competitive behavior via the [joint operating entity] and the resale agreements, as well as ensuring adequate access to spectrum for wireless competitors,” he said. “As is often the case from the perspective of the public interest community, the question is not whether conditions could somehow make this transaction good for the public but whether conditions will at least mitigate the damage to competition."

Free Press has long believed the deals aren’t in the public interest and also hopes to see strenuous conditions imposed, said Policy Adviser Joel Kelsey. “They should be taking a long view and they should be asking what impact will this transaction have on the future of mobile broadband competition,” he said of the FCC. “If they're doing that, I think there are probably a number of conditions they could consider that wouldn’t make things better in the marketplace but wouldn’t alter the trajectory that they're on right now in a substantial way.” Regulators should impose both structural conditions on the spectrum transactions and a series of behavioral conditions on the joint market agreements, he said. “There are conditions that the commission could consider that wouldn’t improve the market for consumers, but would ensure that this transaction doesn’t make things markedly worse.”

A third public interest group lawyer said opponents shouldn’t raise a white flag just yet. “I think the public interest community isn’t ready to throw in the towel,” the lawyer said. “The confidential data in the letter Free Press submitted last week makes a very strong case, and there is a sense that the staff will find it hard to write a decision approving the deal. There is a very strong feeling that conditions are ineffective; experience with the [Comcast/NBC Universal] conditions has only hardened this position.”

The Rural Cellular Association, which asked for conditions rather than a rejection of the transactions, is watching closely the conditions imposed, said President Steve Berry. “Competitive carriers need interoperability,” Berry said. “The FCC has an opportunity to promote competition in the industry by including conditions that give consumers more choices -- interoperability, spectrum divestiture, so more carriers may offer new services, and data roaming requirements."

As the debate continues, Grover Norquist’s Americans for Tax Reform and other free-market groups sent the FCC a letter urging approval of the Verizon Wireless/cable deals. “Demand for wireless broadband is more than doubling annually, but vast swaths of valuable spectrum -- the lifeblood of mobile communications -- remain unavailable to wireless carriers,” the letter said (http://xrl.us/bnbhq7). “Consumers in densely populated urban areas are already suffering from inadequate wireless capacity. While meeting this robust demand will require wireless carriers to adopt an ‘all-of-the-above’ approach, increasing spectrum availability is unquestionably the most fundamental and cost-effective means to meet wireless demand. Unfortunately, spectrum auctions that will enable wireless carriers to bid on additional spectrum remain years away.” The AWS deals present “a rare and crucial opportunity to deploy currently unused spectrum for wireless broadband,” the groups said.