While T-Mobile eludes AT&T, Verizon buys up spectrum

[Commentary] Ding dong, sing the naysayers, AT&T's bid to buy T-Mobile is almost dead. Meanwhile, Verizon is stealthily hunting down spectrum via a lower profile strategy that could generate far less public grief. Consider its recent moves.

On Dec 16, Verizon announced that it has cut a deal with Cox Communications to buy 20 MHz of the cable company's spectrum for $315 million. The purchased licenses are located in the Advanced Wireless Services (AWS) zone, and cover about 28 million "points of presence," aka "POPs"—access links to the Internet or local exchange carriers. In November, Cox disclosed that it was phasing out its wireless service, although it would continue to serve its subscribers through the end of March. On top of the sale, Cox and Verizon will function as "agents," authorized to market each other's products and services—no small detail given that Cox is the third largest cable operator in the United States. But this acquisition pales in scope to another brokered earlier this month. On December 2, Verizon announced that it would acquire 122 AWS licenses covering 259 million POPs for the price of $3.6 billion. The seller is SpectrumCo, LLC, jointly owned by Time Warner Cable, Bright House Networks, and Comcast. Although the Verizon/SpectrumCo transaction is only about a tenth of the monetary size of the AT&T/T-Mobile merger, the participants will still have to seek a green light from FCC and submit to a Hart-Rodino Act review of the sale. This means that the Department of Justice and Federal Trade Commission will look at the deal.

The Cox transaction already has at least one prominent critic: Andrew J. Schwartzman of the Media Access Project. Cox Communications has joined its cable brethren in an arrangement "that insures that Verizon and the cable industry will stop competing with each other," Schwartzman declared in a press release:
“It is clear Verizon will stop building out its FiOS video service. From here on out, cable won't do wireless, and Verizon won't do video. This new cartel means higher prices and less competition. The cease-fire is more important to consumers than the proposed AT&T/T-Mobile transaction because it is much more likely to happen.”

Indeed, the Cox/Verizon deal gives credence to ancient telecom wisdom—the lower the scale and visibility of your proposed merger or buyout, the more easily it will get past regulators.