Ratcheting up the pressure on its closest competitor, Verizon Wireless Friday announced that it would acquire $3.6 billion worth of spectrum from SpectrumCo, a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks.
The announcement comes a day after AT&T, the second largest wireless provider in the US, called the US Federal Communications Commission (FCC) to the carpet for what it called a slanted and unfair analysis of its proposed $39 billion acquisition of Deutsche Telekom's US subsidiary, T-Mobile. AT&T (NYSE:T) has argued the acquisition is essential to serving the needs of its customers. The company said data traffic on its network has increased 8,000 percent over the past four years.
Verizon (NASDAQ:VZ) said it would acquire 122 Advanced Wireless Services spectrum licenses from SpectrumCo, covering 259 million points of presence (POPs). Comcast (NASDAQ:CMCSA), which owns 63.6 percent of SpectrumCo, would receive about $2.3 billion from the sale. Time Warner Cable (NYSE:TWC) owns 31.2 percent of SpectrumCo and would receive $1.1 billion. Bright House Networks owns 5.3 percent of the joint venture and would receive about $189 million. The sale and transfer of the spectrum is subject to FCC approval.
Both Verizon Wireless and AT&T are desperate for additional spectrum as consumer demand for wireless services and bandwidth continues to surge. Verizon said it expects the government, which controls the allocation of spectrum, to free up additional spectrum in the future. However, it also said Friday's deal will ensure that it has adequate spectrum to serve its customers.
"Americans deserve excellence from a wireless service provider, and innovative wireless companies plan ahead in order to deliver on that expectation," Dan Mead, president and chief executive officer of Verizon Wireless, said in a statement. "Spectrum is the raw material on which wireless networks are built and buying the AWS spectrum now solidifies our network leadership into the future, and will enable us to bring even better 4G LTE products and services to our customers. American businesses and consumers can have confidence that the best wireless network has the foundational resources to deliver on that promise."
Verizon and the cable companies also announced additional agreements to resell various products and services. Through the agreements, the cable companies would have the option of selling Verizon's products, and—over time—have the option of selling Verizon Wireless' service on a wholesale basis. Verizon would also have the ability to sell the cable companies' products. The four companies also formed a joint venture to develop technology to better integrate wireline and wireless products and services.
Berating the FCC
Meanwhile, AT&T Thursday blasted the FCC for its preliminary analysis of AT&T's proposed acquisition of T-Mobile, which would allow AT&T to leapfrog Verizon to become the largest wireless provider in the US.
"We expected that the AT&T-T-Mobile transaction would receive careful, considered and fair analysis," Jim Cicconi, AT&T senior executive vice president of External & Legislative Affairs said in a statement Thursday morning. "Unfortunately, the preliminary FCC Staff Analysis offers none of that. The document is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece and not a considered analysis."
Cicconi claimed the FCC report cherry-picked facts to support its views while ignoring others.
"Where facts were lacking, the report speculates, with no basis, and then treats its own speculations as if they were fact," he said. "This is clearly not the fair and objective analysis to which any party is entitled and which we have every right to expect."
Last week, AT&T and Deutsche Telekom responded to the preliminary staff analysis by withdrawing the pending applications for the transaction listed in the Public Notice released by the FCC, but said it would continue to fight for the merger. The two companies also face an uphill battle with the US Department of Justice's Antitrust Division, which initiated its own move to block the proposed merger in August.
Thor Olavsrud is a contributor to InternetNews.com, the news service of Internet.com, the network for technology professionals.