Verizon Wireless’ US$3.9bn acquisition of AWS spectrum from cablecos has finally been approved by the Federal Communications Commission (FCC), but the regulator has added a number of caveats to the deal. The FCC’s conditions include commitments over…
Verizon Wireless’ US$3.9bn acquisition of AWS spectrum from cablecos has finally been approved by the Federal Communications Commission (FCC), but the regulator has added a number of caveats to the deal.
The FCC’s conditions include commitments over roaming, spectrum divestment and build-out. It also requires Verizon to report on its performance in markets where it competes with cablecos.
Verizons’s smaller spectrum transactions with Leap Wireless, Savary Island Wireless and T-Mobile USA were also approved.
The regulator’s endorsement had been widely expected following recent comments by FCC chair Julius Genachowski that he was in favour of the deal following the Department of Justice’s (DOJ) approval last week. The DOJ, which serves as the USA’s antitrust regulator, limited the scope of Verizon’s commercial tie-ups arranged with cablecos. The FCC said it worked closely with the DOJ to prevent anti-competitive and anti-consumer conduct.
Verizon originally agreed to purchase spectrum from cable companies Cox Communications and SpectrumCo – a joint venture of Comcast, Time Warner Cable, and Bright House Networks – in December 2011, shortly before AT&T’s attempt to buy T-Mobile USA for US$39bn fell apart on antitrust grounds.
In a difficult regulatory environment Verizon faced significant hostility from rivals in its bid to receive regulatory approval. However, its commitments to divest itself of A and B block licences in the 700MHz band and its divestment of AWS spectrum to T-Mobile USA got the deal past the regulator.
Nevertheless, the FCC wants to make sure the divestments happen, and soon. It has laid out four key conditions to the deal and the first is that Verizon transfers licences to T-Mobile USA within 45 days of completing the transaction with the cablecos.
The commission has also set Verizon time limits by when it must build out its newly acquired AWS licences. Within three years Verizon is required to provide signal coverage and offer services to a minimum of 30% of the population in the areas it has licences in. That number rises to 70% after seven years.
Another condition the FCC has placed on the deal relates to roaming. The regulator has said Verizon must offer data services on any of its newly acquired spectrum to rivals. It requires the operator to offer commercially reasonable terms and conditions.This condition will expire in five years.
The final key condition of the deal laid out by the FCC relates to the commercial agreements Verizon has signed with the cablecos. The FCC has placed an independent reporting obligation on Verizon.
Every six months the operator is required to submit broadband subscriber figures for regions where its FiOS service competes directly with cablecos.
Verizon has welcomed the FCC’s approval and has accepted the conditions placed upon it.
“This purchase represents a milestone in the industry and we appreciate the FCC’s diligent work to review and approve the transaction,” said Verizon CEO Dan Mead in a statement. “We will work aggressively to ensure that we put this previously unused spectrum to use quickly to benefit customers.”
Verizon also took the opportunity to confirm it is now going ahead with its divestment of A and B block licences in the 700MHz band. It first announced plans to dispose the spectrum in April, but said any sale would be conditional on approval of its AWS purchases.
“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 licences will allow this spectrum to be used to the benefit of other carriers and their customers.”
Verizon Wireless is a JV between Verizon Communications and Vodafone.
