AT&T and Verizon Double-Dare FCC To Stop Spectrum Consolidation
AT&T and Verizon Double-Dare FCC To Stop Spectrum Consolidation
AT&T and Verizon Double-Dare FCC To Stop Spectrum Consolidation

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    Rarely do you see companies double-dare the FCC to back up
    their brave talk about promoting competition. That is, however, what AT&T
    has just decided to do – with a little help from Verizon. After gobbling a ton
    of spectrum last year in a series of
    small transactions, AT&T announced earlier this week it would buy up
    , which holds the last shreds of the old Alltel Spectrum. To top this off,
    Verizon just announced it has selected the purchaser for the 700 MHz spectrum
    it promised to sell off to get permission to buy the SpectrumCo spectrum
    . And
    guess what? The purchaser of the bulk of Verizon’s 700 MHz licenses, which
    Verizon promised to divest to promote competition – is AT&T!


    Mind you, this was exactly the anti-competitive scenario
    many of us predicted
     when Verizon made the offer to sell off its 700 MHz
    licenses in order to bulk up on its AWS footprint. Nevertheless, the FCC
    refused to impose a condition prohibiting the sale of the licenses to AT&T
    on the grounds that it could wait to see who purchased the licenses before
    acting. Well, now we know, and the FCC has the “hypothetical” transaction it
    did not want to consider last summer squarely before it today.


    One would think this alone would constitute a sufficient
    double-dare to the FCC to see if it still means all that stuff about wireless
    competition and preventing excessive spectrum competition. But it gets better.
    AT&T will give Verizon a bunch of AWS licenses, enhancing its spectrum
    concentration as well. In other words, not only is AT&T further
    monopolizing all the spectrum below 1 GHz, but the transaction also bulks out
    Verizon on AWS spectrum to levels the Commission found only last summer were


    But it gets even better. You know that ATNI spectrum
    AT&T is also acquiring? Not only is it primarily valuable super-yummy below
    1 GHz spectrum (with a dash of AWS spectrum for flavor), it has high symbolic
    value as a giant middle finger to the FCC’s use of divestiture conditions to
    promote competition. When Verizon bought Alltel in 2008, the FCC and DoJ
    required a bunch of divestitures. Verizon sold off most of the spectrum to – you
    guessed it – AT&T. The chunk AT&T didn’t want went to ATNI. The
    Commission (and the Department of Justice) allowed AT&T to buy the Alltel spectrum
    from Verizon
    , with a tacit understanding that it would never try to acquire
    the rest of the divested Alltel spectrum.


    In a world where actual divestiture conditions are
    considered a joke, is it any surprise that this “understanding” is regarded as
    beneath contempt by AT&T? Mind you, given that Sprint and T-Mo are tied up
    with transactions of their own, and ATNI is a member of the Competitive Carrier
    Association (CCA), the chief potential opponents of an AT&T/ATNI deal were
    effectively sidelined. So if AT&T were going to make a try for ATNI and its
    spectrum, this was certainly the time.


    But then AT&T and Verizon piled this latest transaction
    on all of this. We have an open 700 MHz interoperability proceeding, during
    which AT&T proceeds to monopolize the 700 MHz B licenses. We have an open
    spectrum aggregation/spectrum screen proceeding, during which the two biggest carriers decide
    to bulk each other up on their favorite spectrum, magnifying their competitive
    advantage over their competitors. Furthermore, even with deals pending before the
    Commission, it is damn hard for Sprint and T-Mo to just let this slide. If
    nothing else, the CCA is not conflicted on this transaction, and will almost
    certainly oppose (at least, if its members have any interest in surviving they
    will oppose). If AT&T and Verizon were trying to rub everyone’s face in the spectrum concentration issue, they could not have done a better job.


    But what astounds me is just the shear number of red lines
    with the FCC that AT&T, with Verizon’s help, have managed to cross in a
    single week. Really? You want to spit on every single pro-competitive spectrum
    move the FCC has done in the last two years? Why? To see if they are serious?
    To not just dare them, but double-dare them to follow thorough on their brave
    words about promoting competition? To see if now that Gene Kimmelman has left
    the DoJ, everything will be wine and roses again for the “wireless duopoly”?


    In any case, we now have the acid test for the FCC and its
    apparent new found commitment to wireless competition. We have seen in the last
    few months how the FCC’s willingness to stop excessive spectrum concentration has brought about $25 billion in investment into the wireless marketplace, as
    well as forcing AT&T to invest $14 million to upgrade its systems. If the
    FCC wants to keep this flow of capital and deployment going, it needs to take
    AT&T and Verizon up on its double-dare and show that “when we said we will
    take steps to prevent excessive concentration of spectrum, we meant


    Or the FCC can do nothing, in which case everyone will know
    that the FCC was only kidding and would-be competitors will look elsewhere to
    invest their money.