T-Mobile and Verizon Wireless are portraying their spectrum swap deal that was announced on Monday as a win-win scenario for both companies. However rising concerns over Verizon’s marketing deals with several cable companies could pose a threat to the outcome.
Monday saw the announcement of a high profile plan which will see Verizon Wireless swap its Advanced Wireless Spectrum (AWS) with T-Mobile. This deal is likely to help Verizon win approval from regulators to complete its $3.9 billion acquisition of spectrum from several cable operators. Regulators are likely to approve the deal, as it improves prior concerns of the company ending up with a dominant share of market spectrum, thus shutting out fellow competitors like T-Mobile.
Despite positive signs, there is still a high probability that the deal may fall apart, thanks to the controversial co-marketing agreement that Verizon has struck with aforementioned cable operators. Regulators are also examining this clause of this deal in search of any violation of antitrust laws. There exists the problem of co-marketing deal, without which cable operators are likely to pull out. This would then trigger the pull out of Verizon Wireless from the spectrum swap deal with T-Mobile.
Vice President of Federal Regulatory Affairs for T-Mobile, Kathleen Ham, said that the deal is a win-win for both carriers, as the deal would not only help Verizon in completing its cable spectrum deal but also give additional spectrum access to both carriers and thus help in making additional use of the spectrum that each of the companies already have. The deal is itself a little complicated as the two companies will exchange spectrum in a total of 218 markets. In 15 of the top 25 markets, Ham asserted that T-Mobile will see an improvement in its LTE spectrum position. He listed several markets where either of the two companies will benefit from the deal. He then catalogued the cities that would see either of the two carriers swapping spectrum and finally revealed the cities where the carriers would be exchanging a sliver of the spectrum.
Ham further added that this deal would result in T-Mobile gaining additional wireless spectrum in five markets while improving contiguity of spectrum blocks in fifteen others. This deal is bound to benefit T-Mobile more, as it would improve its 4G LTE market given that it’s the smallest of the four national carriers. Verizon however felt that the deal was for mutual benefit and hopes that FCC regulators will now approve the 20 MHz it intends to purchase from various cable companies. FCC should be happy with this proposition as it couldn’t see a better scenario where all carriers are allowed to grow.