FCC Conditionally Approves Verizon Deals for Wireless Spectrum

Telecom will move quickly to close transactions

The Federal Communications Commission Thursday conditionally approved Verizon Wireless' $3.9 billion purchase of spectrum from Cox and SpectrumCo companies Comcast, Time Warner Cable and Bright House Networks. It also approved spectrum deals between Verizon Wireless and Leap and between Verizon and T-Mobile.

The FCC coordinated its review and decision with the Department of Justice, which conditionally approved the deals last week by putting limitations on the controversial commercial marketing and joint venture agreements between Verizon and the cable companies, in order to preserve competition. (Verizon has ruffled some feathers in Washington by not only buying spectrum from cable companies it competes with, but also inking marketing deals with its would-be adversaries that some might see as collusive.)

With clearance from both regulators, Verizon Wireless solidifies its position as the largest holder of wireless spectrum. In a statement, the company said it would move quickly to complete the transactions and develop spectrum left fallow by the cable operators.

"This purchase represents a milestone in the industry and we appreciate the FCC's diligent work to review and approve the transaction. We will work aggressively to ensure that we put this previously unused spectrum to use quickly to benefit customers," said Dan Mead, Verizon Wireless' president and CEO.

It was clear from the FCC's press statement that the die for its decision was cast last June when Verizon Wireless announced it would swap/divest some of the spectrum it was purchasing to competitor T-Mobile, the fourth-largest wireless carrier and a company that originally opposed the Verizon-cable deals.

"In connection with the FCC’s review, Verizon Wireless has also undertaken an unprecedented divestiture of spectrum to one of its competitors, T-Mobile, and has committed to significantly accelerate the build-out of its new spectrum," said FCC chairman Julius Genachowski, in a statement.

As part of the order, Verizon Wireless must finalize the T-Mobile deal within 45 days of closing its transactions with SpectrumCo, Cox and Leap.

The FCC's order includes enforceable commitments from Verizon to accelerate the build out of the spectrum and to offer data roaming on commercially reasonable terms and conditions. The FCC imposed only one additional limitation on the commercial agreements, requiring Verizon to provide on a semi-annual basis reports concerning trends in DSL subscribership once the commercial agreements are implemented.

Consumer groups didn't like the DOJ's decision, and they don't like the FCC's order, either.

"Both DOJ and the FCC now have shown that they are content with an anti-competitive deal that will result in job cuts, higher prices and fewer choices for consumers. … The weak conditions on cross-marketing that both the FCC and the DOJ have put in place will result in fewer choices for consumers who already have limited options," the Communications Workers of America said in a statement.

The three Democrats on the commission, Genachowski, Mignon Clyburn and Jessica Rosenworcel, approved the order. The two Republicans, Robert McDowell and Ajit Pai, approved in part and concurred in part.