T-Mobile USA, one of the most vocal critics of Verizon’s $3.9 billion AWS purchase, appears to have reached a truce with its larger competitor.
The two operators said today they will swap AWS spectrum in 218 markets, a deal giving T-Mobile a “net gain” of spectrum to use for its forthcoming LTE network.
“This is good for T-Mobile and good for consumers because it will enable T-Mobile to compete even more vigorously with other wireless carriers,” T-Mobile CEO and President Philipp Humm said in a statement, calling the spectrum “critical.”
T-Mobile has repeatedly asked the FCC to stop Verizon from purchasing a nationwide swath of AWS spectrum from four cable operators, arguing the deal will prove anticompetitive by concentrating too much spectrum in the hands of a single company. T-Mobile has also attacked Verizon for not using AWS spectrum it purchased in 2006, and says Verizon isn’t using its spectrum as efficiently as it claims.
The agreement between the two companies will likely remove T-Mobile as an opponent to Verizon’s spectrum deal with the cable providers, since it is contingent upon FCC approval of the larger AWS transaction.
The agreement includes licenses Verizon is working to purchase from the cable operators and spectrum from a separate deal with Leap Wireless International. The contract also depends on the closure of the Leap deal.
Verizon is working to close the transaction with its cable partners by late summer.
Some critics of Verizon’s AWS purchase from cable operators have asked the FCC to force Verizon to divest some of the licenses. T-Mobile may have been able to benefit from the forced divestitures, but its arrangement with Verizon gives it an amount of certainty it would have otherwise lacked.
If its new deal with Verizon goes through, T-Mobile will gain spectrum covering 60 million people in Philadelphia; Washington, D.C.; Detroit; Minneapolis; Seattle; Cleveland; Columbus, Ohio; Milwaukee; Charlotte, N.C.; Raleigh-Durham, N.C.; Greensboro, N.C.; Memphis, Tenn.; and Rochester, N.Y.
In turn, Verizon will gain spectrum covering 22 million people and an unspecified “cash consideration.”
The contract between the two operators also includes spectrum swaps in a number of markets “to create more contiguous blocks of spectrum and re-align spectrum in adjacent markets.”
Verizon previously offered to sell off its 700 MHz A block and B block licenses if the AWS deal closes, an offer T-Mobile rejected on the grounds that the A block licenses faced too many problems with interference to be viable.