Thursday, August 23, 2012

FCC Approves Verizon Wireless-SpectrumCo Deal

The FCC approved the Verizon Wireless-SpectrumCo deal, subject to the following conditions:
  • the assignment of AWS-1 licenses held by Cox and SpectrumCo (a joint venture among subsidiaries of Comcast, Time Warner Cable, and Bright House Networks) to Verizon Wireless;
  • a spectrum swap between Verizon Wireless and Leap;
  • and Verizon Wireless’s net assignment of AWS-1 licenses to T-Mobile.
The deal is also subject to the Consent Decree between DOJ and SpectrumCo and Cox, which was announced last week.

The FCC noted that to address staff concerns regarding spectrum concentration, Verizon Wireless undertook an unprecedented divestiture of spectrum to a competitor, T-Mobile. In addition, the Commission’s Order includes enforceable commitments from Verizon Wireless to accelerate buildout of its newly acquired spectrum, as well as to offer data roaming on commercially reasonable terms and conditions.

Regarding the buildout, within three years, Verizon Wireless will provide signal coverage and offer service to at least 30 percent of the total population in the Economic Areas or the portions of Economic Areas in which it is acquiring AWS-1 license authorizations (calculated by summing the population for each of these areas). Also, within seven years, Verizon Wireless will provide signal coverage and offer service to at least 70 percent of the population in each Economic Area in which it is acquiring AWS-1 license authorizations, or, where a portion of the Economic Area is acquired, to at least 70 percent of the population of the total acquired portion of the licensed Economic Area.

In addition, Verizon must provide on a semi-annual basis, subject to an appropriate protective order, reports concerning trends in DSL subscribership following the implementation of the commercial agreements.

To gain DOJ approval, the companies have agreed to a proposed settlement forbids Verizon Wireless from selling cable company products in FiOS areas and removes contractual restrictions on Verizon Wireless’s ability to sell FiOS, ensuring that Verizon’s incentives to compete aggressively against the cable companies remain unchanged.

In addition, under the proposed settlement, Verizon Wireless’s ability to resell the cable companies’ services to customers in areas where Verizon sells DSL Internet service ends in December of 2016 (subject to potential renewal at DOJ's sole discretion), thereby preserving Verizon’s incentives to reconsider its decision to stop building out its FiOS network and otherwise innovate in its DSL territory.

The DOJ is limiting the duration of a technology joint venture that the companies had planned to set-up to develop wireless + wireline solutions. In addition, the companies are limited in the exchange of competitively sensitive information.

"This purchase represents a milestone in the industry and we appreciate the FCC's diligent work to review and approve the transaction," said Dan Mead, president and chief executive officer of Verizon Wireless. "We will work aggressively to ensure that we put this previously unused spectrum to use quickly to benefit customers."

http://www.fcc.gov
http://www.verizonwireless.com
  • In December 2011, Verizon Wireless announced a deal to acquire 122 Advanced Wireless Services spectrum licenses from SpectrumCo, a joint venture between Comcast Corporation, Time Warner Cable, and Bright House Networks, for $3.6 billion. The transfer of licenses will require approval from the FCC and review from the Department of Justice. The companies also announced several agreements to resell each others' services. The cable companies will have the option of selling Verizon Wireless' service on a wholesale basis. Furthermore, the companies will form an innovation technology joint venture to develop technology that better integrates wireline and wireless products and services.
  • In June 2012, T-Mobile USA and Verizon Wireless announced a sale and exchange deal covering certain Advanced Wireless Services (AWS) spectrum licenses in 218 markets across the U.S. Some of the spectrum contemplated in this transaction included licenses that Verizon is purchasing from SpectrumCo, Cox and Leap, and the agreement is contingent on the closing of those transactions and is subject to regulatory approval by the Federal Communications Commission (FCC) and the Department of Justice.

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