Verizon Wireless makes offer to sell 700 MHz licenses if 1.7/2.1 GHz license deals approved

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Verizon Wireless’ (VZ) spectrum game took an interesting turn this morning as the nation’s largest wireless operator said it would be willing to sell off some of its 700 MHz spectrum holdings if the government approves pending transactions to acquire 1.7/2.1 GHz spectrum.

Verizon Wireless said it would hold an “open sale process” for all of its A- and B-Block 700 MHz spectrum licenses its had acquired during the Federal Communications Commission’s Auction 73 in 2008, which cover a number of large markets as well as rural areas. That sale would only proceed if the federal government approves the carrier’s currently proposed deals to acquire 1.7/2.1 GHz licenses from a cadre of cable companies operating under the SpectrumCo name, Cox and Leap Wireless.

The deal has since garnered opposition from industry associations and individual operators claiming that the move would aggregate too much spectrum into the hands of the nation’s largest operators. Verizon Wireless rival AT&T was denied its attempt to acquire smaller competitor T-Mobile USA late last year in a move that AT&T said was needed in order to bolster its spectrum holdings.

“Since wireless operators, large and small, have expressed concern about the availability of high-quality spectrum, we believe our 700 MHz licenses will be attractive to a wide range of buyers,” said Molly Feldman, VP of business development for Verizon Wireless, in a statement. “Moreover, provided our acquisition of AWS spectrum is approved, our open sale process will ensure these A and B spectrum licenses are quickly and fairly made available for the benefit of other carriers and their customers.”

Verizon Wireless picked up 77 licenses in the B Block and 25 licenses in the A Block during the FCC auction. Both blocks include 12 megahertz of wireless spectrum.

The A-Block licenses cover a number of large markets, including New York; Philadelphia; Washington-Baltimore; Orlando, Miami and Tampa, Fla.; Atlanta; Cincinnati and Cleveland, Ohio; Detroit and Grand Rapids,Mich.; Indianapolis; Kansas City; Minneapolis; Oklahoma City; Dallas, Austin, Houston and San Antonio, Texas; Denver; Los Angeles, Fresno, San Francisco and Sacramento, Calif.

The B-Block licenses cover broader “cellular market areas” in larger markets of Los Angeles; Chicago; Miami; Cincinnati; Rochester, N.Y.; Memphis, Tenn.; Oklahoma City; Greensboro-Winston Salem, Charlotte and Raleigh-Durham, N.C.; as well as smaller markets in Florida, Colorado, Georgia, Idaho, Louisiana, Maryland, Montana, Nevada, New Mexico, South Dakota, Texas, Utah, Virginia, Washington and Wyoming.

The FCC earlier this year adjusted the comment cycle on Verizon Wireless’ deals with SpectrumCo and Cox, adding that it was not an attempt to coordinate or link the consideration of those proposed deals. However, on the FCC site, both transactions are grouped together on its “merger” page.

Verizon Wireless earlier this month hinted that approval of the spectrum deal could lead to expansion of video services to its wireless platform.

Verizon Wireless is currently using its 22 megahertz, nationwide C-Block 700 MHz license to support its LTE network, which is set to surpass coverage of two-thirds of the nation’s potential customers. The carrier plans to use its 1.7/2.1 GHz spectrum assets to bolster capacity of its LTE network. Verizon Wireless had originally picked up 13 1.7/2.1 GHz licenses that included 12 megahertz of spectrum per license covering 192 million pops for $2.8 billion during Auction 66 in 2006.

Potential suitors for the 700 MHz licenses are expected to be extensive as just about every carrier is in need of spectrum in order to support the build out of next-generation networks. The most desperate would seem to include T-Mobile USA, which despite plans for extensive spectrum re-farming could still use more spectrum for its LTE plans; MetroPCS, which is desperately short of spectrum to support its current LTE network; and Leap Wireless, which recently signed a roaming agreement with Clearwire in order to support broader LTE coverage.

AT&T, of course, is also a potential suitor for the B-Block licenses as that would align well with the carrier’s current LTE deployment plans. However, opposition is sure to be raised about that deal as it would again maintain control of valuable spectrum assets in the hands of the nation’s two largest operators.

More details are expected tomorrow when Verizon Communications announces its first quarter financial results.

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Dan Meyer

Editor-in-Chief, Telecom Software, Policy, Wireless Carriers
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Dan Meyer started at RCR Wireless News in 1999 covering wireless carriers and wireless technologies. As editor-in-chief, Dan oversees editorial direction, reports on news from the wireless industry, including telecom software, policy and wireless carriers, and provides opinion stories on topics of concern to the market such as his popular Friday column “Worst of the Week.”

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