Verizon's spectrum slam dunk over AT&T

Talk about ironic: AT&T got slammed by the FCC for its $39 billion bid to buy T-Mobile USA (and its spectrum) in recent days. Then on Friday, Verizon Wireless said it is buying wireless spectrum from three cable companies for $3.6 billion.

Given recent history, the FCC seems fairly likely to approve the Verizon deal, which involves 122 Advanced Wireless Services licenses being purchased from SpectrumCo, a joint venture of Comcast, Tim Warner Cable and Bright House Networks. Verizon said those licenses will serve 259 million people in the U.S.

So far, none of the critics of the big AT&T merger with T-Mobile have stepped forward to condemn the cable spectrum deal with Verizon as anti-competitive or likely to eliminate jobs as they did with AT&T.

One has to wonder why AT&T didn't act to acquire cable spectrum, and whether AT&T CEO Randall Stephenson might be hiding out at a local coffee shop.  Various sports metaphors come to mind: Verizon's end run ... Hail Mary ... slam dunk ... yada yada.

"I'll bet AT&T wishes they could have got their hands on this spectrum," independent analyst Jeff Kagan said.  "That would have solved their problem, but they are taking a different path by trying to acquire T-Mobile."

It's not clear to me how much AT&T could have benefited long-term by getting the cable spectrum that Verizon seems to have won. The impact now is important, but getting more spectrum is always going to be an issue for carriers.  

One of the reasons AT&T and Verizon and others are rapidly pushing for 4G LTE deployments is that LTE uses the raw material of spectrum more efficiently than previous technologies. By deploying LTE, the carriers also get to boast to consumers that they get a 10x data speed improvement over 3G also.

The carriers always say that spectrum is the name of the game, even though they compete on many other fronts.  AT&T got the iPhone first, which obviously helped. Both AT&T and Verizon are closely matched in total customers, with AT&T at 100 million and Verizon at 107 million. Both carriers are constantly improving on new phones and offerings of services to business customers.  

Maybe Stephenson and his attorneys have something up their sleeves on acquiring T-Mobile, but legal experts have said the Clayton Act makes it pretty simple for the Department of Justice to argue in federal court in February that the merger is anti-competitive.

Maybe there's a little shopkeeper somewhere spinning straw into spectrum?

Copyright © 2011 IDG Communications, Inc.

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