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FCC asks Verizon to explain its conditional 700MHz spectrum sale

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The FCC has submitted a letter to Verizon asking for more information on its conditional sale of 700MHz spectrum.

Verizon Wireless Neon Logo Stock 1020
Verizon Wireless Neon Logo Stock 1020

The FCC has formally asked Verizon a series of questions today regarding its proposed sale of A and B Block 700MHz spectrum — spectrum that it has only agreed to sell if it's allowed to buy controversial AWS spectrum from the so-called SpectrumCo consortium of cable companies. The SpectrumCo deal has generated enormous buzz both from smaller wireless companies and the government because it's in a frequency that T-Mobile could use (which, by all appearances, is more spectrum-constrained than Verizon is) and because it involves a number of co-branding agreements with Comcast and others that could ultimately limit competition both in television and broadband offerings in many markets.

Verizon's offer has already raised eyebrows in private industry because it covers blocks of the 700MHz band that are currently incompatible with 700MHz handsets from both Verizon and AT&T. Those companies have long claimed that requiring interoperability would raise serious technical challenges, but smaller carriers — rural networks in particular — have demanded it, saying that they're unable to wield enough purchasing power on their own to launch competitive handsets without piggybacking on hardware commissioned by the larger players. The FCC has recently agreed to look into it, but hasn't issued a ruling.

As for today's questions, they're the same ones many others are asking: has Verizon made any effort to use the spectrum it's trying to sell, or has it just been sitting there? Is it usable? What's the relationship between this sale and its desire to acquire SpectrumCo's assets? And finally, would it really abandon the sale if it isn't allowed to buy what SpectrumCo is selling? Verizon has stated that it wants to deploy additional LTE capacity in SpectrumCo's holdings, but so does T-Mobile, which — unlike Verizon — already operates a nationwide AWS network in support of its 3G service. Verizon, meanwhile, would be expanding to AWS for the first time.

The FCC is requiring a Verizon response by next Tuesday, May 22nd — a relatively short turnaround, although this fight could drag on for many additional weeks.