The FCC has asked Verizon Wireless for clarification on its spectrum plans, following its plan to buy AWS spectrum from a consortium of cable companies for $3.6 billion and sell some of the 700MHz frequencies it already owns. To make the AWS purchase more palatable to regulators, Verizon is proposing to sell off many of the Lower 700MHz licenses it bought in an FCC auction in 2008, and has made the sale contingent on approval of its new purchase.
In a letter published by the regulator yesterday (pdf), it asks Verizon the steps it has taken to date to deploy services using the 700MHz licences in question, which include a network buildout obligation for June 2013. It also asked the operator to “explain the relevance, if any,” of the 700MHz sale plans on its investigation of the AWS transaction, including any details of previous sale efforts, and its plans if the AWS deal does not go through.
Some reports suggested that the request indicates that the FCC has concerns about the deals, and Verizon’s approach to its spectrum holdings. Rivals of Verizon, including Sprint and T-Mobile USA, have argued that the AWS deal is unnecessary, due to the existing spectrum holdings. The FCC has requested a response from Verizon by 22 May 2012.
Verizon bought 700 MHz frequencies in 2008 for $4.4 billion. Verizon will auction all of its 700 MHz Lower A and B Block spectrum. AT&T currently uses “B-block” spectrum, while smaller regional carriers use “A block” spectrum. Verizon currently uses their nation-wide “C-Block” licenses, which are 20 MHz wide, exclusively for its LTE network.
The above chart shows Verizon owning some 25 licenses in the lower “A” block. But recently, Verizon swapped their 12 MHz A Block spectrum with Cricket, so they may not need to provide roaming on the “A” block. Verizon’s LTE devices work only on their nationwide (10 MHz x 2) upper C Block spectrum.
No doubt, AT&T (in blue) would like to purchase more of Verizon’s “B-Block” (in green), especially for cities like Chicago where AT&T has only half the LTE spectrum of Verizon.
Carriers like Sprint, T-Mobile and MetroPCS say the cable deal would create allies out of former rivals, while selling the “B-Block” spectrum to AT&T would strengthen the Verizon/AT&T duopoly.