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Verizon slips $3.6bn shiv into AT&T, T-Mobile ribs

Wireless pecking order exploded by massive spectrum purchase

Internet Security Threat Report 2014

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. ®

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