Published reports indicate that Verizon Wireless’ plans to acquire wireless spectrum from a handful of cable companies is on the verge of government approval, with conditions.
The Wall Street Journal reported this morning that anti-trust regulators were set to approve Verizon Wireless’ $3.9 billion transaction after the wireless giant and cable companies agreed to temper their joint marketing efforts. Those joint marketing efforts were to include bundling of services in markets where Verizon Wireless and the cable operators offered services.
Verizon Wireless announced the proposed deals late last year that would see the carrier pick up 1.7/2.1 GHz spectrum licenses covering 259 million potential customers from Comcast, Time Warner Cable and Bright House Networks. The spectrum portion of the agreement, which includes 20 megahertz of spectrum per license, would inflate Verizon Wireless’ already robust 1.7/2.1 GHz spectrum holdings, which the carrier plans to use to beef-up its LTE network that currently relies on 700 MHz spectrum. The deal is valued at $3.6 billion and would provide a significant return on the $2.4 billion they spent on 137 spectrum licenses during the 2006 auction.
Verizon Wireless also announced a separate transaction with Cox Communications to acquire 20 megahertz 1.7/2.1 GHz spectrum holdings for $315 million. Cox noted that those spectrum assets cover 28 million potential customers.
While the deals were announced separately, the Federal Communications Commission announced earlier this year that it would align the comment cycles on both deals. Those deals are currently at day 173 of the FCC’s scheduled 180-day time clock.
The companies have already begun to offer bundled services in some markets, a process that would likely be curtailed according to The Wall Street Journal story.
Opponents to Verizon Wireless’ spectrum deals have noted that in addition to aggregating more spectrum resources into the hands of the nation’s largest operator, the marketing agreements between Verizon Wireless and cable companies would strike a blow to competition in the telecommunications space. The latest news on the approval process would seem to take out that aspect of dispute.
In a separate transaction, Verizon Wireless also announced a spectrum deal with Leap Wireless that would see Leap acquire a 12 megahertz patch of spectrum in the 700 MHz band covering Chicago from its larger rival for $204 million and in turn sell various 1.9 GHz and 1.7/2.1 GHz spectrum licenses to Verizon Wireless for $188 million.
Shortly after announcing those deals, government regulators quashed AT&T’s attempted $39 billion acquisition attempt of T-Mobile USA citing an impact on competition in the mobile space. AT&T noted that the deal was necessary in order to bolster the carrier’s spectrum portfolio to handle increased consumer demand for wireless data services.
Following the government’s decision to block the AT&T/T-Mobile USA deal, Verizon Wireless announced a number of additional transactions through the first part of this year that if approved would see the carrier unload some of its other spectrum holdings. The carrier announced in April that it would auction off its A- and B-Block 700 MHz spectrum licenses if the government approved its 1.7/2.1 GHz spectrum license deals.
In June, Verizon Wireless announced a deal with T-Mobile USA to sell off some of the 1.7/2.1 GHz spectrum licenses Verizon Wireless would gain if the deal with the cable operators was approved. That proposed deal also removed T-Mobile USA’s opposition to Verizon Wireless’ other spectrum deals.
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