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Verizon, Cable Ops Defend AWS Sale

Mon, 03/05/2012 - 7:06am
Maisie Ramsay

Verizon Wireless defended its $3.9 billion purchase of spectrum from four cable companies against critics of the deal in documents filed with the FCC on Friday, and continued to insist the commission exclude a marketing side deal from its review of the transaction.

The acquisition, announced shortly before the failure of AT&T's merger with T-Mobile USA last year, gives Verizon a nationwide swath of AWS spectrum it will use to beef up its LTE network

T-Mobile and MetroPCS have asked the government to block the transaction because it would result in what they characterize as "excessive concentration" of spectrum in Verizon's control.

Verizon says it could run into a spectrum shortage as early as next year if it doesn't secure additional airwaves.

"Despite the company's significant investment in network efficiencies, skyrocketing demand will overtake its 4G LTE capacity absent additional spectrum resources, which it needs to secure now given that it faces spectrum constraints in its network in some areas as early as 2013 and in many more by 2015," it said in documents filed with the FCC on Friday.

Friday was the deadline for rebuttals to opponents of the deal. Verizon's opposition to petitions against the transaction was filed in conjunction with the cable operators it is buying the spectrum from – Comcast, Time Warner Cable, Bright House Networks and Cox Communications.

Calling the sale "squarely in line" with government goals to free up more airwaves for mobile broadband services, Verizon said the deal is in the public interest, the FCC's standard for approving transactions.

"These transactions will enable Verizon Wireless to address the growing mobile broadband demands of its customers," Verizon said.

In addition to the spectrum sale, Verizon and the cable operators also agreed to cross-sell each other's products and services.

Verizon has been reticent to put information about the side deal in the public record and says it should not be factored in the FCC's review, claiming the agency should only be concerned with the portion of the transaction pertaining to the transfer of the cable companies' AWS licenses.

But groups challenging the transaction say the cross-selling arrangement could have a broad impact on the competitive landscape and want the FCC to consider the tangential deal in its review.

Verizon maintained its stance in its latest filing, saying the FCC should stay away from the marketing agreement because it is out of the agency's purview and is already being reviewed by the Justice Department.

"Critics are seeking to entice the Commission into extending its authority beyond its bounds and duplicating the work of the DOJ," it said.

Verizon is paying $3.6 billion for 122 AWS licenses from Comcast, Time Warner Cable and Bright House Networks. A separate $315 million deal with Cox Communications provides it with additional AWS holdings.

The cable operators purchased the spectrum during a 2006 auction, but never fully realized their wireless plans and left the airwaves fallow.

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