The U.S. Federal Communications Commission has conditionally approved a multibillion swap of wireless spectrum between Verizon Wireless, T-Mobile and four of the biggest cable TV system operators in the U.S.
But for the deal to go ahead, the FCC is demanding Verizon meet goals for rolling out services using the new spectrum and offer data roaming to competitors at fair prices.
The deal is important because radio frequency spectrum is a finite resource so it is valuable and vitally important for Verizon and T-Mobile. The amount of spectrum each holds directly affects the speed, reach and strength of wireless service that can be offered to consumers.
The companies reached a deal in December last year that will see Verizon buy unused spectrum from Comcast, Time Warner Cable, Bright House Networks and Cox Communications. The cable companies had bought the spectrum in earlier government auctions but never ended up using it.
Verizon plans to use some of the spectrum itself, sell some to T-Mobile under a June 2012 agreement and auction the rest. A second part of the deal involved Verizon and the cable companies reselling each other's services.
The U.S. Department of Justice gave conditional approval on Aug. 16 as long as some parts of the latter commercial deal were changed.
The FCC's conditions target Verizon's actual use of the frequency space it will acquire and should help answer claims from competitors that, once acquired, Verizon might not put it to use.
"If commenters' concerns are accurate that Verizon Wireless does not need the spectrum it is acquiring, at least in the near term, and the result is that Verizon Wireless does not in fact put the spectrum to use, [Verizon's] asserted benefits would be undermined," the FCC said in its ruling.
Therefore, the commission is requiring Verizon to offer advanced wireless services using the spectrum to at least 30 percent of populated areas covered by the frequency space within three years. Then, within seven years, service must be available to at least 70 percent of the population of the areas.
Reacting to the FCC's announcement, Verizon offered assurances that it intends to use the spectrum.
"This purchase represents a milestone in the industry and we appreciate the FCC's diligent work to review and approve the transaction," Dan Mead, president and chief executive officer of Verizon Wireless, said in a statement. "We will work aggressively to ensure that we put this previously unused spectrum to use quickly to benefit customers."
The FCC is also requiring Verizon conclude its spectrum transfer to T-Mobile within 45 days of acquiring it from the cable companies and that Verizon continue to offer data roaming on services using the acquired spectrum as fair rates.
Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is [email protected]