June 25, 2012, 11:34 AM — Verizon Wireless will swap spectrum with T-Mobile USA in the AWS (advanced wireless service) band, if Verizon can get regulatory approval to buy the spectrum from a group of cable companies, the companies announced Monday.
T-Mobile has previously opposed Verizon's plan to buy more than US$3.9 billion worth of spectrum from the cable companies.
The spectrum swap would allow both Verizon and T-Mobile to better use their AWS holdings, and to optimize their spectrum holdings, Verizon said in a press statement. The deal will give Verizon more contiguous spectrum and depth in many markets in the eastern U.S. and additional AWS spectrum in 17 markets in the western U.S., a Verizon spokeswoman said.
The agreement includes several intra-market spectrum swaps and a net transfer of spectrum from Verizon to T-Mobile, the company said. The deal will include an undisclosed cash payment from T-Mobile to Verizon.
"The agreement with T-Mobile is further evidence of the importance of a secondary spectrum market to give companies the flexibility to exchange or acquire spectrum to meet customers' growing demands for wireless data services," Dan Mead, president and CEO of Verizon Wireless, said in a statement.
Verizon announced plans to buy spectrum from Cox Communications and from SpectrumCo, a joint venture among Comcast, Time Warner Cable and Bright House Networks, in December. The companies are looking for approval from the U.S. Federal Communications Commission, but several groups have opposed the deals, saying they would give Verizon a huge, anticompetitive advantage in the mobile industry. The deals would also create joint marketing and research agreements between Verizon and the cable providers.
The spectrum swap with T-Mobile is an attempt by Verizon to end the smaller carrier's opposition to the cable spectrum deals, said Harold Feld, senior vice president of Public Knowledge, a digital rights group opposed to the deals.
"That Verizon Wireless feels the need to buy off T-Mobile to close its spectrum/marketing deals with the country's largest cable operators underscores just how bad this deal really is for American consumers and competition generally," Feld said in an email. "The parties cannot justify creating a web of anti-competitive agreements and tools for future anti-competitive collusion by divesting a handful of licenses."
The license transfer will not address the ability of Verizon and the cable companies to use the proposed marketing and research agreements "to develop a patent portfolio capable of bringing the mobile patent wars from handsets to online video," Feld added.