June 25, 2012
T-Mobile And Verizon Ink Deal To Buy And Swap Spectrum
Michael Harper for redOrbit.com
Today, T-Mobile and Verizon have announced a deal wherein they will purchase and swap some of their AWS spectrum with one another. The two companies are claiming that shuffling spectrum will boost their respective 4G signals and generally improve their networks. In their press release, T-Mobile´s CEO Phillip Humm put it thus, "This agreement will provide T-Mobile with critical AWS spectrum, enhancing both network capacity and performance and allowing us to meet the growing consumer demand for 4G mobile broadband.”While the two companies have tentatively signed these deals, they will have to await the FCC´s approval.
"This is good for T-Mobile and good for consumers,” continues Humm, “because it will enable T-Mobile to compete even more vigorously with other wireless carriers. We anticipate FCC approval later this summer, in time for us to incorporate this new spectrum into our network modernization and the rollout of LTE services next year."
This agreement also moves some of that troubled spectrum Verizon will try to acquire from cable companies. Their proposed acquisition of said AWS spectrum has been met with plenty of criticism and the close, watchful eye of the feds.
In May, several businesses, including Sprint and T-Mobile, banded together to form the Alliance for Broadband Competition (ABC), which aimed to block the Verizon purchase of this cable-owned spectrum.
In a statement about this announced T-Mobile/Verizon deal, the ABC said that, "While it's nice that Verizon will cede a small portion of its vast spectrum holdings to T-Mobile, that does nothing to mitigate the fact that Verizon and Cable want to stop competing, stop investing, and stop innovating to the great detriment of consumers and the American economy."
"Our position remains the same: we urge the DoJ and FCC to continue their thorough examination of these agreements to ensure a competitive telecommunications industry.”
Now, if this deal is approved by the FCC, Verizon won´t be the only company to benefit from their acquisition. As such, it´s expected the FCC will approve the deal between Big Pink and Big Red, as they´ve already attempted to save T-Mobile once by shielding them from the AT&T merger.
No financial details of the deal have been announced yet, but according to ZDNet, T-Mobile will have to pay out some money to Verizon as they swap spectrum.
While both companies stand to benefit from such a deal, some analysts are saying Verizon´s prime motivation is to appease federal regulators. Speaking with ZDNet, Wells Fargo analyst Jennifer Fritzsche has said, “This is a proactive move by Verizon to improve its position with regulators that are reviewing the SpectrumCo acquisition by helping T-Mobile acquire needed spectrum and likely reducing its pro forma AWS holdings in cities where it would have the highest concentration in the band. This is a positive transaction for both Verizon and T-Mobile, in our opinion, and should bolster the chances of the SpectrumCo transaction being approved.”
T-Mobile has recently been shoring up their 4G networks in an apparent push to support the next iPhone, though it is still unclear if they will officially carry the iPhone or simply continue to allow unlocked phones to run on their networks.
In May, T-Mo announced a hefty $4 billion 4G rollout to be completed by next year. The company will use some of the money and spectrum from their failed deal with AT&T to roll out this network.