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Verizon to sell unused 700MHz licenses if allowed to buy controversial spectrum from cable companies

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Verizon is offering its A and B block 700MHz spectrum for sale, provided that the US government approves its acquisition of SpectrumCo's AWS holdings.

Verizon Wireless store (1020)
Verizon Wireless store (1020)

Verizon has announced today that it'll "conduct an open sale process" for its 700MHz spectrum licenses in the so-called A and B blocks, licenses that it doesn't currently use to support its ongoing LTE rollout. There's a catch, though: the offering is contingent on government approval of the carrier's controversial acquisition of $3.6 billion worth of AWS spectrum (the same band used by T-Mobile) from a consortium of cable companies, a deal that has been met by considerable resistance from smaller carriers and has been called into question by both Congress and the FCC.

Verizon's offer is a carrot that it's dangling in front of the government

In other words, Verizon's offer is a carrot that it's dangling in front of the government. It's easy to see why Verizon would consider this trade: the A and B blocks of the 700MHz spectrum are not interoperable with the C block using existing LTE devices. Requiring interoperability between these blocks has long been a talking point for rural carriers, many of whom own A and B block licenses — they argue that they don't have the size or finances to commission competitive hardware from OEMs on their own, so only by piggybacking off orders from giants like AT&T and Verizon can they effectively deploy LTE to their small customer bases. AT&T and Verizon, meanwhile, have countered that there are technical challenges to requiring that interoperability. It's a big enough issue so that the FCC has taken it up, but in the meantime, Verizon would need its devices to be interoperable across the A, B, and C blocks if it were to make use of all its 700MHz licenses — a win for the rural carriers, and a potential source of competition for Verizon.

Verizon says that it's going through with the initial stages of the sale process now so that it can close the deal quickly upon completion of the SpectrumCo sale — a deal that is far from certain considering the government's concerns. The carrier's presumptuous attitude is reminiscent of the one that AT&T exhibited throughout its failed attempt to buy T-Mobile, coincidentally.