Critics Slam Verizon Spectrum Plans

Company counters that it is simply lining up best mix of assets to serve customers

By John Eggerton -- Broadcasting & Cable, 4/18/2012 12:44:06 PM

Critics of Verizon's planned purchase of cable operator spectrum were quick to jump on the company's announcement Wednesday that it was putting the 700 MHz spectrum it got in an FCC auction on the block contingent on the approval of the purchase of AWS spectrum from SpectrumCo.

"Until today's announcement, Verizon denied that it was hoarding spectrum," said Free Press Research Director Derek Turner in a statement. "This sale demonstrates that Verizon has in fact warehoused spectrum and the company will likely profit handsomely from this spectrum speculation strategy. Verizon does not need cable's spectrum. Verizon already controls large swaths of unused beachfront airwaves that it could use to meet future demand. Allowing Verizon to foreclose future wireless competition by gobbling up the valuable airwaves currently held by its cable competitors is clearly not in the public interest."

Public Knowledge saw the announcement as a way to grease the skids for government approval.

"Verizon is trying to use the mere offer of a spectrum sale tempt the FCC and the Justice Department into approving the deal with the cable companies," said PK legal director Harold Feld. "and the agencies should resist the temptation. Recent history of such spectrum sell-offs shows that when Verizon and AT&T sell off spectrum, it's Verizon who buys AT&T's, and vice versa. Having AT&T buy Verizon spectrum in this instance would do nothing to help consumers."

A Verizon official, speaking on background, called the charges baseless.

"Verizon Wireless isn't trying to make some larger political point, as Public Knowledge and Free Press suggest," he told B&C/Multi. "If the FCC approves our pending purchase of spectrum, we will have other spectrum to sell.  We are simply making that known and beginning the process for selling it. It's that simple."

He said the company's spectrum plans are a case of building ahead of demand. "Verizon purchased these licenses in 2008 to have available spectrum to meet customers' increasing demand for wireless services," he said. "In 2008, we also purchased the 700 MHz upper C block spectrum, which we're using robustly today to build out our 4G LTE network. Given the tremendous capabilities inherent in our 4G LTE network, we are focusing on what we believe to be the right mix of spectrum assets needed for us to expand that network, which includes AWS