Verizon’s spectrum grab hits a brick wall

Verizon Wireless is not going to get the spectrum it is looking for from the cable companies easily. Opponents are turning up the heat, and in a combined statement have called on the FCC to suspend its review of Verizon’s $3.9 billion acquisition of AWS spectrum.

T-Mobile USA, Sprint, DirecTV, and several consumer groups joined together to demand that the agency force Verizon to detail cross-marketing agreements with SpectrumCo (a joint venture of Comcast, Time Warner Cable, and Bright House Networks) and Cox Communications for the sale of the spectrum. Portions of the agreement that relate to “pricing, compensation and marketing strategies” were redacted.

Clearly T-Mobile stands to lose the most. The carrier’s 4G strategy revolves around AWS, and as a result T-Mobile will find it hard to gather additional spectrum to continue to build out its network. That was the gist of the company’s first complaint to the FCC in late February.

Verizon says that the company has provided a full unredacted version of the deal to regulators, but that doesn’t matter. The company’s competitors — especially T-Mobile — are right in demanding more details from the nation’s largest carrier.

If the cable companies are about to promote Verizon Wireless’ services heavily, that will give the carrier a significant advantage over everyone else. Hiding the deal through redactions seems a little sneaky.

What is the difference between what is happening here, and the marketing power a combined AT&T and T-Mobile would have enjoyed? There is none. In this environment where spectrum is at a premium, carriers with the ability to acquire it will begin to pull away from those who can’t.

T-Mobile and Sprint are in this very position. Neither has a lot of money to play with, and in T-Mobile’s case especially are spectrum-starved. Not only will they have to fight a competitor with enough spectrum following this acquisition for widespread deployment of next-generation services, but also the additional marketing power of the cable providers. That’s a huge advantage.

Is this fair? It doesn’t seem like it. While Verizon will argue that the spectrum grab will help consumers, it is consolidating a rare commodity in the hands of a precious few, and considering the way the FCC turned down the AT&T/T-Mobile merger, large spectrum acquisitions like this should receive just as much scrutiny.

The ball is now in the FCC’s court, and its next moves may have profound effects on the future of the wireless industry. Is the FCC really serious about competition in the space, or can carriers get around this attempting to hide its true intentions? I guess we’ll find out soon.

Verizon’s spectrum grab hits a brick wall