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Cable Technology Feature Article

August 27, 2012

FCC Approves Verizon's Deal with Cable Operators for Advanced Wireless Service

By Frank Griffin, TMCnet Contributing Writer

Data is a word wireless companies love and dread because it is a great source of revenue, but their ability to provide it effectively strains their resources to the limit. To offset this strain, Verizon Wireless (News - Alert) has been working for sometime to purchase more Advanced Wireless spectrum from cable companies, and the FCC recently approved the $3.9 billion transaction. This gives Verizon a clear advantage over other carriers in providing a reliable source of data.

The news is welcomed by Dan Mead, president and CEO of Verizon Wireless who said “We will work aggressively to ensure that we put this previously unused spectrum to use quickly to benefit customers.” The spectrum the company will use was purchased by cable operators Cox and SpectrumCo in 2006 in a FCC (News - Alert) auction and it was never used. As part of the deal Verizon must sell some of its spectrum so it will not have an unfair advantage over other wireless carriers. It will be selling the 700 MHz lower A and B block spectrum licenses to other carriers.

The Department of Justice and the FCC had reservations because Verizon already owns 20 megahertz of AWS spectrum and companies with fewer spectrums were left out of the opportunity to purchase those assets.

Data usage will increase by an estimated 20 fold by 2015 and currently the wireless companies will not be able to meet that demand. In approving the deal the FCC accelerated the build out requirement of the spectrum license. Verizon must offer service to 30 percent of their customers covered with AWS within three years and the remainder 70 percent within seven years.

The deal gives Verizon an additional 20 megahertz of AWS spectrum which it will use to add capacity to its LTE (News - Alert) network. The company has more than 92 million customers nation-wide in over 370 markets covering an estimated 75 percent of the population in the United State.

AWS is the spectrum in the range of 1710 – 1755 and 2110 – 2155 MHz and it is mostly used in fixed and mobile services for data, voice, Internet and text messaging. The spectrum is categorizes as AWS-1, AWS-2, AWS-3 and AWS-4 and the FCC controls how this spectrum is licensed and used. The high frequency of AWS allows wireless carriers to carry more data but the frequencies don’t travel far. The combination of low and high frequencies allows carriers to use both spectrums to provide services in cities and rural areas.

The hope is the purchase of this spectrum will benefit the customer with more service. This is possible but as long as few companies control the majority of the bandwidth they will be able to dictate the pricing structures and not competition. The FCC must make the spectrum available to every company capable of providing the service to ensure it is not monopolized by anyone.

Edited by Juliana Kenny

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