FCC Approves Verizon Wireless's Acquisition of AWS-1 Spectrum with Conditions
Following the Department of Justice’s conditional approval of the spectrum transaction, including the so-called “Commercial Agreements,” under which Verizon Wireless acquires the AWS-1 licenses of by Comcast, Time Warner Cable and Bright House networks via Spectrum Co and those of Cox Communications, the FCC granted its consent to these license assignments and related applications calling for (i) the assignment of certain AWS-1 licenses from Verizon Wireless to T-Mobile, and (ii) the exchange of certain licenses between Verizon Wireless and Leap Wireless, imposing two conditions on Verizon Wireless: (1) an aggressive buildout schedule; and (2) it will enter data roaming agreements with other Wireless providers.
Public Interest Benefits. The FCC summarized the public interest benefits of the spectrum transactions as follows:
We find that the proposed transfer of spectrum from SpectrumCo, Cox, Leap, and T-Mobile to Verizon Wireless would have some important public interest benefits. Most importantly, the transfers from SpectrumCo, Cox, and Leap would result in utilization of currently fallow spectrum to meet the rapidly growing public demand for mobile broadband capacity, and help the United States continue to lead the world in 4G deployment and development. Given that the current licensees are not utilizing the spectrum for any purpose and appear unlikely to do so in the future, this will provide significant public interest benefits. In addition, we find that the record supports a public interest benefit in the intra-market transfers of equal amounts of spectrum between Verizon Wireless and T-Mobile, as the rationalization of spectrum holdings would enable more efficient deployment and use of the spectrum.
The Commission’s assessment of the benefits is more than reasonable, even though it may encourage speculation in spectrum auctions: If the business case to buildout a network appears uneconomic, an auction winner may still realize a windfall by flipping the spectrum.
Accelerated Buildout. The Commission gave due consideration to arguments raised by several parties that Verizon Wireless is “warehousing” spectrum, questioning Verizon Wireless’s ability to use and its actual need for the AWS-1 spectrum. The FCC imposed on Verizon Wireless 3-year and 7-year signal coverage and service obligations of 30 percent and 70 percent, respectively, of the total population in the Economic Areas or portions of the EAs covered by the AWS-1 licenses being assigned to it.
Data Roaming Obligation. The FCC recognized the interests of other wireless services carriers that “have experienced difficulty in the past negotiating broadband data roaming arrangements with providers offering the broadest coverage and the transfer of AWS-1 spectrum to Verizon Wireless necessarily means that the spectrum will not be developed by other providers that might have greater incentives to provide voluntary roaming arrangements.” Accordingly, the Commission hedged its bets on the pending appeal of its Data Roaming Order. The FCC required that “[i]n the event the current data roaming rule is not available to requesting providers” Verizon Wireless must offer roaming arrangements for commercial mobile data services on any of its spectrum in the areas where it is acquiring AWS-1 spectrum . . . to other commercial mobile data service providers on commercially reasonable terms and conditions . . . .”
While this obligation runs for five (5) years, limiting Verizon Wireless’s roaming agreement obligation only “in areas where it is acquiring AWS-1 spectrum” may leave coverage gaps that could prove problematic if the Data Roaming Order is not affirmed.