TC2's David Rohde on Telecom
By David Rohde Posted June 26, 2012
One thing’s clear about wireless spectrum: Nobody’s getting any more of it without a fight from somebody else. And by “fight” I don’t mean a boxing match to a knockout, but a tough negotiation till your opponent gets what it wants.
That’s clear from a deal struck Monday by Verizon Wireless with T-Mobile USA. In exchange for some spectrum swaps in which T-Mobile will pick up capacity in many big metro markets, T-Mobile dropped its opposition to Verizon buying massive gobs of spectrum held by four cable companies that don’t plan to go into wireless themselves.
Of course spectrum has always been part of the political process. Not even Verizon or AT&T can just go out and “buy” spectrum. It’s a government license and any proposed change of ownership requires a license transfer application.
But today the stakes are mission-critical for carriers, so each license application is turning into a donnybrook. Carriers feel that a real sense of asymmetry is developing in the U.S. wireless market. Verizon is galloping along in 4G LTE, now announcing fill-in markets, while AT&T is still rolling out metros and Sprint is still dreaming of its initial introductions.
And one carrier’s negotiation with Verizon can be viewed as capitulation by another carrier. Nobody else really likes the Verizon / T-Mobile agreement, especially fellow opponents of the Verizon cable spectrum purchase who view T-Mobile as a turncoat.
Corporate users have a complex stake in all this. Coverage and network performance from any selected carrier are utterly critical, given an increasingly restless and demanding end-user base. If spectrum purchases and spectrum swaps truly help one carrier rationalize and improve its network, so much to the good – all other things being equal.
But none of this will be available at a decent price if the carrier field becomes too unbalanced and effective competition goes down the drain. Despite the rejection of the AT&T / T-Mobile merger in 2011, it’s still not clear if four national carriers will be left standing when all the dust settles, or even three with roughly competitive mobile broadband networks. The arena of spectrum license transfers, and the back-room negotiations that affect the sides that line up for and against each application, is the critical one to watch.Tags: Spectrum, T-Mobile, Verizon Wireless