Verizon may have to sell some AWS spectrum from cable deal
updated 12:05 pm EDT, Fri May 25, 2012
FCC may require Verizon to divest some AWS spectrum, marketing conditions may see deal fall
Verizon's $3.6 billion buy of AWS spectrum may be approved by the FCC after all, analysts believe, though it will require a number of conditions. For one, it may have to give up some of its spectrum, and has already offered to give some up in the past. What may stand in the way is the conditions of the sale, with all involved trying to get the most of it, CNET reported.
Paul Gallant, an analyst at Guggenheim Partners, wrote that he believed the FCC will require Verizon to divest some AWS spectrum as part of its approval, going beyond just the 700MHz voluntary sale. Gallant believes that a recent letter to the DoJ and FCC from Senate Antitrust Subcommittee Chairman Herb Kohl supports his own findings. Another unnamed source close to the FCC confirms the agency is considering at this option.
The main concern is that Verizon will have the 4G market cornered with the new spectrum, and while it promises not to use all of it right away, competitor T-Mobile is concerned Verizon is warehousing it.
The other issue that may see the deal fall apart is the joint marketing agreement between the cable companies and Verizon. For example, cable operators may opt out of it entirely if limits are imposed on data usage or marketing cable services for overlapping services such as Verizon FiOS. Gallant wrote that reducing one aspect of a deal may mean the deal needs to be revised to "account for that value shift in the economics of the agreement."
The FCC has extended its deadline for approving the deal, and promised to finish its analysis by August 7. Gallant reported that a final decision won't be made until the fall.
