VZW finally gets 700 MHz assets

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November 14 2008 - 1:55 pm EDT | Jeffrey Silva | RCR Wireless News

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The Federal Communications Commission gave final clearance to Verizon Wireless’ $4.7 billion purchase of a nationwide collection of regional licenses at the 700 MHz auction earlier this year, refusing Google Inc.’s request to impose a stronger open-access condition and revising a key component of its merger review policy.

The FCC action, which also requires the new No. 1 wireless provider to divest 10 megahertz in a New Jersey market, follows the agency’s approval of the $28 billion Verizon Wireless-Alltel Communications L.L.C. merger and cellular association CTIA’s withdrawal of a legal challenge to the C-Block open-access provision.

The 700 MHz licenses picked up by Verizon Wireless resulted in the carrier exceeding the 95-megahertz threshold in 17 markets, but after further review, the FCC concluded the newly acquired spectrum would not pose competitive harm in those markets. At the same time, the FCC said in the future it would count spectrum won at auctions toward the 95-megahertz spectrum screen. In recent merger rulings and continuing through its ruling on Verizon Wireless’ 700 MHz licenses, the FCC has not factored spectrum acquired at auctions into the 95-megahertz screen because winning bidders have been unable — for a variety reasons — to immediately secure the airwaves from the government to put it into operation.

The two Democrats on the Republican-controlled FCC welcomed the merger review change.

“Until today, the commission applied its spectrum screen to licenses obtained via merger or acquisition, but not to licenses acquired via auction. As we have stated before, this double standard makes no sense. Accordingly, we are pleased that today’s item announces that, from now on, the commission will apply its spectrum screen to both forms of spectrum acquisition,” stated Commissioners Michael Copps and Jonathan Adelstein.

As a result of the Nov. 4 elections, which gave Democrats control of the White House and larger majorities in Congress, there could be efforts to scrutinize wireless industry consolidation and revive the spectrum cap. The 55-megahertz cap was abolished in 2003. Tbe spectrum cap represented a more formalized policy than is the spectrum screen that’s been employed by the FCC the past five years.

Regarding the FCC’s rejection of Google’s petition for stricter C-Block open-platform requirements, Copps and Adelstein expressed measured support for more clarity.

“When we voted to establish service rules for that spectrum, we both expected that the C-Block winner would observe the openness rules for its own devices as well as those sold by third parties,” the commissioners stated. “And we believe today that the language in the commission’s rules establishes this legal requirement. However, to the extent that any parties believe the language is not clear enough, we would have preferred that the commission dispel any potential confusion by making this point directly in today’s item.”

One public-interest group urged the FCC to stay on the case regarding open access.

“CTIA’s flip-flop — coupled with the continued blocking and locking practices of the wireless networks — reminds us that we need the FCC to remain a vigilant cop on the beat protecting consumers with clear, enforceable openness rules,” said Ben Scott, regulatory director of Free Press.

Given its public support for net neutrality, the incoming Obama administration may push for greater openness in the wireless space even as carriers pursue their own plans to loosen their grip on networks and allow the entry of third-party devices and applications.