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Cable Technology Feature Article

June 26, 2012

Verizon and T-Mobile Reach Spectrum Trade Agreement Contingent on Verizon Cable Deal

By Rory Lidstone, TMCnet Contributing Writer

Those worried about the impending Verizon spectrum deal with cable companies Comcast (News - Alert), Time Warner Cable and BrightHouse will be happy to know that Verizon is actually planning on giving up some of its wireless spectrum with T-Mobile. However, the deal is a trade that will see Verizon receive spectrum as well.

While both operators are exchanging spectrum, T-Mobile will walk away from the deal with more than Verizon. Of course, T-Mobile had to make up the difference in cash but, since full financial terms weren't disclosed, it's tough to say who got the better deal. We do know that the deal includes existing spectrum held by T-Mobile and Verizon as well as some of the spectrum that Verizon will receive in the cable company deal.

T-Mobile says that the new spectrum will help strengthen its planned LTE service set to be implemented next year. Furthermore, the deal will boost the carrier's position in 15 of the top 25 U.S. markets, including cities such as Philadelphia, Detroit, Minneapolis, Seattle, Cleveland, Columbus, Milwaukee and Rochester, N.Y.

“This agreement will provide T-Mobile with critical AWS spectrum, enhancing both network capacity and performance and allowing us to meet the growing consumer demand for 4G mobile broadband,” said T-Mobile CEO, Philipp Humm. “This is good for T-Mobile and good for consumers because it will enable T-Mobile to compete even more vigorously with other wireless carriers. We anticipate FCC (News - Alert) approval later this summer, in time for us to incorporate this new spectrum into our network modernization and the rollout of LTE services next year.”

While this deal has made T-Mobile — formerly the primary critic of Verizon's cable deal — happy, others maintain that Verizon is still being unfair in terms of spectrum control.

"I'm glad to see a competitive carrier may get access to some of the spectrum that Verizon Wireless (News - Alert) has proposed to purchase as part of the SpectrumCo and Leap transactions," said RCA president and CEO, Steven K. Berry in a statement. "However, this reaffirms our concern that Verizon Wireless will hold more spectrum than they currently plan to use and some of their spectrum should go to competitive carriers."

Others, meanwhile, feel that the T-Mobile/Verizon deal is a buy off:

"That Verizon Wireless feels the need to buy off T-Mobile to close its spectrum/marketing deals with the country's largest cable operators underscores just how bad this deal really is for American consumers and competition generally," said Harold Feld, SVP of Public Knowledge (News - Alert). "As Public Knowledge has consistently pointed out, the true danger lies not only in the concentration of spectrum in the hands of the leading wireless provider, but with the cozy, cartel-like arrangements between Verizon, Comcast, and the other MSOs party to the deal.”

Verizon is a sponsor of ITEXPO West 2012. To be held Oct. 2-5 at the Austin Convention Center in Austin, TX, ITEXPO (News - Alert) is the world’s premier IP communications event. For more information on IEXPO West 2012 click here.

Edited by Brooke Neuman

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