FCC Presses Verizon on Spectrum Warehousing

WASHINGTON: The Federal Communications Commission is asking Verizon Wireless what it’s been doing with the 700 MHz licenses it won more than four years ago, now that it wants to sell them off. The commission this week sent a letter to John T. Scott III, vice president and deputy general counsel of Verizon Wireless, asking for more information regarding its proposed sale.

“In light of the fact that lower 700 MHz A and B block licensees are required to build out a specified portion of their licenses by June 2013 or face a reduction in their license term, what steps to day, if any, has Verizon Wireless taken to deploy mobile services using the Lower 700 MHz A or B block licenses—either or both?” states the letter, dated May 15 and signed by Wireless Telecom Bureau Chief Rick Kaplan. “On what timetable has Verizon Wireless been planning to deploy mobile services in these Lower 700 MHz spectrum blocks?”

Verizon announced last month that it would sell its A and B block holdings “in order to rationalize it’s spectrum holdings.” The company said a sale was contingent its acquisition of the advanced wireless spectrum from a group of cable operators. That deal, announced last December, involves 122 AWS licenses in the 2 GHz spectrum, now held by Comcast, Time Warner Cable and Bright House in joint venture called “SpectrumCo.”

Verizon offered to buy those licenses for $3.6 billion in a service-swap arrangement in which the cablers sell Verizon Wireless service and vice versa. Cox, a former member of SpectrumCo, is seeking to sell Verizon 30 AWS licenses for $315 million in a separate but similar arrangement. Service deployments already have started. The license transfers are pending FCC approval.

Kaplan asked Scott what the proposed 700 MHz divestiture had to do with the commission’s consideration of the AWS acquisition, and if Verizon had tried to sell the 700 MHz licenses before, and if so, when.

“Would Verizon Wireless abandon its plan to sell its lower 700 MHz licenses if the commission does not consent to the sale of all the AWS licenses at issue to Verizon Wireless?” Kaplan inquired.

He further asked Scott to provide further information on a previous claim that the lower-band spectrum was “not as suitable for our LTE capacity requirements.” Verizon basically said broadcasters on Ch. 51, adjacent to the A block spectrum, were in the way.

The commission froze new broadcast applications on Ch. 51 last August at the behest of the wireless industry, and “encouraged” incumbents to relocate. Around 30 TV stations around the country operate on Ch. 51. Verizon also said that commission “effectively preclude A block licensees from providing service in certain geographic markets.”

Verizon won 109 licenses in the 2008 auction of 700 MHz spectrum, made available to wireless companies after broadcasters were cleared from Chs. 52-69 in the digital transition. Verizon paid nearly $9.4 billion for 77 B block licenses cover 16 percent of the U.S. population; 25 A in the A block covering 52 percent, and seven in the C block covering 98 percent. The A block corresponds with Chs. 52, 57, and parts of 61 and 66. The B block comprises Chs. 53, 58 and parts of 64 and 69. The C block covers Chs. 60 and 65, and most of 61 and 66.

The AWS spectrum Verizon seeks from the cable operators is better for launching 4G LTE service than the A and B block 700 MHz spectrum it holds, according to TV Technology contributor and transmission expert, Doug Lung. (See, “Verizon Plans 700 MHz Spectrum Sale.”)

U.S. Cellular is reported to be interested in Verizon’s 700 MHz licenses. (The same provider is seeking FCC approval to receive 700 MHz A block spectrum in a transfer from Cox.) Other carriers—Sprint and T-Mobile among them—oppose Verizon’s spectrum swaps. Both belong to the Alliance for Broadband Competition, a group formed to prevent the license transfers. Other members include public interest watchdog, Public Knowledge, the American Antitrust Institute, the Rural Cellular Association and the Rural Telecommunications Group.

Verizon’s response to the FCC’s query is due May 22.

~ Deborah D. McAdams

The FCC’s transaction page

May 15, 2012:
“Cox Seeks To Transfer 700 MHz Spectrum to AT&T, U.S. Cellular”
Cox now wants to transfer the A Block to U.S. Cellular, and the B Block to AT&T.

April 26, 2012:“Verizon Plans 700 MHz Spectrum Sale
UHF spectrum is attractive for wide area coverage in rural areas, due to its large range, but that advantage becomes a disadvantage in congested areas, as sites require large separation distances between transmitters. 

December 2, 2012:“Comcast, TWC, and Bright House Sell AWS Spectrum to Verizon for $3.6 Billion”
In addition to the spectrum sale, the conglomerates struck an agreement to sell each others’ service. 

October 18, 2011:“Cellphone, DTV Interference Issues Examined”
Charles Rhodes examines signals at Ch. 51.

August 22, 2011:“FCC Freezes Ch. 51, Encourages Broadcast Occupants to Vacate”
The commission today issued a public notice freezing all new and pending applications for licenses on Ch.. 51, and encouraging incumbents to relocate.