Verizon spectrum deal to boost LTE offering

06 September 2012 | Kavit Majithia


Verizon’s FCC approval for its $3.9 billion acquisition of AWS frequencies from SpectrumCo will cement the carrier’s leadership position in the US LTE market, according to market watchers.

The US operator finalised the deal with Time Warner Cable, Bright House Networks and Cox Communications in December last year but was only granted approval by regulators in mid-August 2012.

Although AWS spectrum does not possess benefits in terms of penetration and reach, it will enable the carrier to improve its data capacity offering to customers in urban areas, according to research firm Analysys Mason.

“AWS will carry more capacity than lower frequencies, and this will be particularly useful in the urban markets which were targeted in Verizon’s initial LTE deployment strategy,” said Morgan Mullooly, research analyst at Analysys Mason.

“Furthermore, the AWS licences are parcelled as 2x10MHz or 2x5MHz so Verizon, with the right combination of adjacent spectrum, could be able to utilise some pretty wide bandwidth and consequently – could deliver impressive data throughput for subscribers.”

After its bid for T-Mobile USA failed last year, top rival AT&T has been concentrating on accumulating low frequency 700MHz licences in a number of regional markets, but still has large gaps in its coverage, particularly in areas of the Mid-West.

Verizon, in comparison, already has a 700MHz licence inventory covering 48 US states, enabling the ability, in theory, to provide ubiquitous LTE coverage. This means that the carrier can now focus upon improving the bandwidth quality of its service.

The sale of lower 700MHz spectrum, agreed by Verizon as a pre-condition to the deal, is also considered to be of little disadvantage because the licences were “practically useless” to the carrier anyway due to interference issues between the lower 700MHz and upper 700MHz band, according to Mullooly.

Among the revisions placed on the deal for it to gain approval were limitations on the marketing agreement with SpectrumCo stakeholders.

The planned strategy to combine and promote Verizon and SpectrumCo offerings will not be allowed in markets where Verizon offers its FiOS fibre services and in areas where the carrier only offers DSL. The joint marketing must also end by December 2016.

The length of the planned technology joint venture between the companies has also been restricted and any resulting products will require licensing.