Verizon slips $3.6bn shiv into AT&T, T-Mobile ribs
Wireless pecking order exploded by massive spectrum purchase
In a surprise move that sent shivers through its competitors, Verizon announced on Friday that it will pay $3.6bn to acquire a broad swath of Advanced Wireless Services (AWS) spectrum from SpectrumCo, a consortium composed of Comcast, Time Warner Cable, and Bright House Networks.
"Spectrum is the raw material on which wireless networks are built," Verizon president and CEO Dan Mead said in a statement, "and buying the AWS spectrum now solidifies our network leadership into the future."
Indeed it might. The 122 acquired AWS licenses, the announcement says, cover "259 million POPs." That'd be 259 million points of presence – or, to look at it another way, 259 million customers.
To get access to these POPs – and moms, one must assume – Verizon will pay SpectrumCo's majority owner Comcast $2.3bn, Time Warner Cable $1.1bn, and minority partner Bright House Networks $189m.
Not that those three companies will miss their departing AWS licenses. As cable companies, they were essentially just sitting on them since they bought them in 2006, waiting until the right buyer came along. And one can only assume that they'll make a nice, tidy profit from the deal.
The mood can't be all that sprightly in the corner offices of AT&T's Dallas, Texas, headquarters, what with the collapse of its T-Mobile merger effort – complete with back and forth sniping with the FCC – and now this surprise move by Verizon.
Neither can things be that cheery at the Bonn headquarters of Deutsche Telekom, T-Mobile's parent. In fact, we'd venture that T-Mobile is more threatened by Verizon's spectrum grab than is AT&T. Should the AT&T merger not go through – which seems likely – T-Mobile will have little room for expansion on its own, now that the biggest available chunk of AWS spectrum is no longer available.
There remains the chance that the FCC will find a way to free up more spectrum, as it has been trying to do, if only to ensure that there remains enough spectrum in the
SpectrumCo new Verizon markets to enable competitors to, well, compete. And it's possible that Friday's announcement will fire up AT&T lobbyists enough to break the "anything the Obama administration wants, we don't" logjam that's paralyzing Washington.
It will be interesting to read the digital tea leaves as we watch how the FCC responds to the Verizon move. After all, they still need to approve it before it can go through.
Historically, these kinds of FCC reviews can take up to a year, or even longer. Amid the white heat of the exploding wireless broadband revolution, however, we're expecting a quicker approval process this time around. ®
we just had
the news from our upper bosses about this, certainly interesting as we just gave up our tower space too for our company radios. my employers last "wireless" venture with sprint fell flat on it's face 6 months after they launched it...
Unless they're issuing one per customer (complete with clumsy backhaul to drag around with you, although coverage would be fabulous), I suspect this is the new management speak for "people".
@186k, well, AT&T played up the "oh, we need so much spectrum", but in reality I think they wanted to buy T-Mobile to eliminate the low-cost GSM competition.
For you Brits, a short recap of the US cellular market... in general, AT&T and T-Mobile are the high and low-cost national GSM carriers, and Verizon Wireless and Sprint the high and low-cost nationwide CDMA carriers. Then there might be a few extra carriers in the mix in any given market. AT&T and VZW have both gone from $30 for unlimited data to $25 for 2GB (AT&T) or $30 for 2GB (VZW) with $10/GB overage. T-Mobile charges $20 for 2GB, *but* throttles rather than charging cash so you don't really have to worry about usage. Sprint's $30 unlimited data is still unlimited.
Anyway... as for the spectrum.
"Normal" cellular service here is at 850 or 1900mhz, either GSM/EDGE/HSPA or CDMA/EVDO.
Verizon Wireless has started running LTE at 700mhz (which is SICK -- I got 28mbps in a speed test at the store with only 2 bars, and people have gotten like 75mbps now and then.) VZW has 700mhz licenses covering the continental US in it's entirety, but intends to use AWS to add capacity.
AT&T has rolled a bit of LTE as well, I've heard in both 700 and AWS. They intend to use 700mhz for LTE as much as possible, but use AWS (1700mhz uplink, 2100mhz downlink) to add capacity or fill in coverage (in places where AT&T has AWS but no 700mhz.)
AWS is already used by T-Mobile (for 21mbps and 42mbps HSPA+... they run GSM/GPRS/EDGE at 1900mhz) and by MetroPCS and Cricket (they run CDMA/EVDO at 1900mhz, but run CDMA/EVDO in AWS in markets where they didn't get any 1900.) MetroPCS is also running LTE, I think also in AWS.
It's kind of a balancing act -- if VZW gets enough LTE phones (especially when VoLTE -- Voice over LTE -- gets implemented) they can start shutting CDMA and EVDO channels off and run more LTE at 850/1900. But they can't shut them down too quickly and degrade service for people who don't upgrade their phones.