The Federal Communications Commission wants Verizon Wireless to explain why it never deployed cellular services in spectrum that it acquired four years ago and is now trying to sell off in order to get a better chunk of spectrum for its 4G-LTE network.
Verizon is trying to buy $3.6 billion worth of spectrum in the Advanced Wireless Services (AWS) band from a consortium of cable companies in a deal that requires FCC approval and has drawn antitrust concerns from competitors. To make that purchase more palatable to regulators, Verizon is proposing to sell off many of the Lower 700MHz licenses it bought in an FCC auction in 2008, and has made the sale contingent on approval of its new purchase.
The FCC sent Verizon Wireless a letter (PDF) yesterday noting that Verizon has yet to deploy services in the Lower 700MHz band, and asked what steps, if any, Verizon took to build out the spectrum. The FCC also asked Verizon to describe what challenges it faces in the 700MHz band and explain the relevance of the 700 MHz sale to its pending purchase of AWS spectrum. "What steps to date, if any, has Verizon Wireless taken to deploy mobile services using the Lower 700 MHz A or B Block licenses (either of both)?" the FCC asked. "Would Verizon Wireless abandon its plans to sell its Lower 700 MHz licenses if the Commission does not consent to the sale of all of the AWS licenses at issue to Verizon Wireless?"
Back in 2008, Google warned the FCC that it should force Verizon to honor the 700MHz spectrum's open access requirements, which call on network operators to let consumers use any device or application on the network—not just Verizon's. The FCC didn't mention this provision in its letter, but by swapping spectrum, Verizon would gain the benefit of ditching a provision meant to ensure wireless competition and consumer choice. The FCC did mention that Verizon has only until June 2013 to build out the 700MHz spectrum or face a reduction in its license term. CORRECTION: The open access rules apply only to the Upper 700MHz spectrum, not the Lower 700MHz spectrum at issue here.
Verizon has claimed its purchase of new spectrum will help it meet "consumer demand for wireless services and bandwidth," and that the sale of 700MHz will help "rationalize its spectrum holdings." The FCC showed its willingness to preserve competition in the cellular industry when it blocked AT&T's attempt to purchase T-Mobile, and is displaying a healthy dose of skepticism toward Verizon's spectrum deals. Verizon will have to provide some good answers about its use of old spectrum if it is to get those new airwaves it so desperately wants.
Further reading: LTE's future: A scramble for spectrum, and creative data caps
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