Inside The Beltway 08/24/12

It’s a go. The Federal Communications Commission gave the nod to the spectrum deal between Verizon Wireless, Cox and SpectrumCo (a joint Comcast, Time Warner Cable and Bright House Networks venture), subject to several strictures (to read the order, click here). The agency and the U.S. Department of Justice’s Antitrust Division now are in sync.

According to the order, released late yesterday, Verizon Wireless must:

>> Close its proposed spectrum transfer with T-Mobile within 45 days of its closing of the SpectrumCo, Cox and Leap transactions.

>> 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).

>> Within seven years, 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 the event the current data-roaming rule is not available to requesting providers, continue to offer roaming arrangements for commercial mobile data services on any of its spectrum in the areas where it is acquiring AWS-1 spectrum; this commitment will remain in place for five years following the date of the order.

>> 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.

“Approval of the substantially modified transaction will benefit consumers in several ways.  By advancing U.S. leadership in 4G LTE deployment, the transaction marks another step in our effort to promote the U.S. innovation economy and make state-of-the-art broadband available to more people in more places,” commented Chairman Julius Genachowski following release of the order. “The transaction will preserve incentives for deployment and spur innovation while guarding against anti-competitive conduct. And, vitally, it will put more than 20 megahertz of prime spectrum – spectrum that has gone unused for too long – quickly to work across the country, benefiting consumers and the marketplace.”

This approval also means Verizon Wireless start selling its 700 MHz lower A- and B-block licenses. Added Dan Mead, president/CEO at Verizon Wireless, "We expect a very robust sales process as more than 65 parties have requested and received information about the spectrum we are selling. Selling the A and B licenses will allow this spectrum to be used to the benefit of other carriers and their customers."

A blog post written by David L. Cohen, Comcast’s executive vice president, provides a laundry list of what happens next for the MSO as a result of the order:

>> Comcast will be able to market Verizon Wireless products and services across its entire footprint under a renewable agent agreement (for the first five years, it will be exclusive to Verizon Wireless, but Verizon Wireless will not be able to enforce the exclusivity provisions after five years).

>> Comcast and Verizon Wireless will be able to work together for at least five years in a R&D partnership to integrate wireless and wireline products and services; after five years, the two can continue the partnership if the DoJ agrees.

>> Comcast has the right to opt into a MVNO (or reseller) agreement with Verizon Wireless at any time after six months’ notice.

>> Verizon Wireless will be able to market Comcast products and services throughout much of Comcast’s footprint (everywhere outside the FiOS footprint) under a renewable agent agreement; after five years, Verizon Wireless can renew the agreement other than in the DSL footprint where DoJ approval is required.

Watchdog group Free Press generally was pleased with the conditions but expressed concern that the order didn’t include buildout requirements. “Seven years is too long for rural and suburban customers to wait for quality mobile broadband service,” said the group’s policy advisor Joel Kelsey.