Following the ultimate rejection of the proposed merger between AT&T and T-Mobile, federal regulators were presented with a unique opportunity to establish a framework for regulating the nationwide use of its limited spectrum resources. While certainly a pipedream, had regulators stood firm against wireless carrier’s insatiable desire for more spectrum they could have established a global precedent, treating spectrum like any other natural resource, mandating its use to the benefit of all.
But of course we all knew that wouldn’t happen, and in fact I was fairly confident that the next controversial spectrum grab following AT&T’s failed acquisition bid would likely get approved simply to help regulators save face, and it just so happens that that next proposal down the pipe was Verizon’s deal with a consortium of cable companies to purchase a large chunk of what I called ‘beachfront’ spectrum.
Much to the chagrin of public interest groups, the U.S. Department of Justice approved Verizon’s $3.6 billion bid for the additional spectrum last week, although it did so after adding numerous stipulations, provisos, and addendums to assuage anti-competition concerns.
“The FCC is realizing that these companies and consumers really need more spectrum,” Dan Olds, principal analyst at Gabriel Consulting Group told the E-Commerce Times. “They’re also cognizant to the fact that sometimes they’re perceived as being anti-business, especially in regards to deals like this. In the face of a nationwide recession, that’s not exactly a reputation you want.”
While there are certainly some that laud this approval as a big step forward for regulators who had, to this point, had their heads in the sand regarding the looming spectrum crisis, the flip side of the argument is that the biggest player in the American wireless market has made itself that much more dominant, decreasing competition from much of the market that ultimately will hurt the end consumer.
At the time the deal first went public, Verizon attempted to sweeten the pot by promising to auction off some of its less that useful 700MHz spectrum, and with the deal passing one of its largest regulatory hurdles, it looks like Verizon has stayed true to that promise, selling a portion of its spectrum to T-Mobile. As I mentioned previously, however, it remains to be seen whether that spectrum can actually be deployed in the development of a 4G LTE network.
While it really comes as no surprise that this smaller deal was approved, it was evident that regulatory bodies like the DOJ and FCC are still fighting to gain control over the wireless market. To that end, the DOJ imposed several conditions on the spectrum acquisition, not only forcing Verizon to concede some spectrum, but closely regulating its deal with the cable company consortium over how cable content is sold and distributed by Verizon as well.
In the end its clear that neither the DOJ or the FCC really liked this deal in its proposed form either, but approving it with a series of stipulations shows that both bodies recognize that companies like Verizon need more spectrum, and that they did everything they could do to make the proposal more palatable for the public.