Verizon May Turn Table on T-Mobile on Spectrum Screen

Verizon appears to be girding for a fight with T-Mobile over whether its spectrum holdings should preclude the “uncarrier” from bidding in the C-band auction, which starts Dec. 8, industry officials said. Verizon would flip the script on T-Mobile, which lobbied against Verizon and AT&T holdings seeking preferential treatment for competitors in the TV incentive auction (see 1408130047).

T-Mobile recently added 600 MHz spectrum in a lease with Columbia Capital and picked up a dominant position in the 2.5 GHz band through its buy of Sprint. AT&T has 175 MHz and Verizon 115 MHz of sub-6 GHz spectrum, versus 324 MHz for T-Mobile (see 2006050042). That doesn't include 3.5 GHz spectrum.

“Verizon has been bragging about its millimeter spectrum holdings and 5G strategy,” said T-Mobile Vice President-Government Affairs, Technology and Engineering Policy Steve Sharkey. “Any attempt to prevent T-Mobile from getting additional spectrum, including during the C-band auction, is clearly intended to use regulation to thwart competition both in providing services and in the auction.” Verizon didn’t comment Thursday.

LightShed’s Walter Piecyk flagged the brewing fight in note to investors earlier that day. Verizon appears to be “lining up an argument against T-Mobile being able to bid in the C-Band auction,” he said. Verizon is highlighting the FCC’s “long forgotten spectrum screen, arguing that T-Mobile already owned too much spectrum in a few markets,” he said: “Verizon’s argument would not be unwarranted. The approval of the Sprint transaction and the FCC’s upcoming cleanup auction of 2.5 GHz spectrum provides T-Mobile with visibility on nearly 200 MHz of mid-band spectrum.”

Any Verizon push would probably fall flat, New Street’s Blair Levin told us. “As a policy matter, it seems to run counter to a general policy view that the Republicans have pushed to the effect that limits on bidders are not appropriate in terms of spectrum caps or bidder caps,” he said: “As an institutional matter, I can't see the FCC wanting to disqualify a bidder who would add significant bidding tension to the auction.”

Lawyers who represent carriers said Verizon is likely to raise the issue. They said the current FCC probably wouldn't pursue the spectrum screen issue. That could change with a new commission if Democratic nominee Joe Biden is elected president.

On the citizens broadband radio service auction, a Wireless ISP Association spokesperson said its members, by the group’s count, won 3,308 licenses, or 16% of all licenses won, across 1,235 counties, with bids of more $93 million.

Verizon and Dish Network accounted for more than 60% of net auction proceeds, Wells Fargo’s Eric Luebchow told investors. AT&T was “noticeably absent," he said: “We're not overly surprised by this, and expect them to be looking at C-band in earnest, but historically AT&T has been one to not see a spectrum band it didn't want.”

“The surprises were the absence of AT&T and the minimal winning bids from T-Mobile, whereas DISH won a near national footprint,” wrote Citi’s Michael Rollins. Verizon went for depth, paying 39 cents MHz/POP “to cover 46% of the U.S. population in roughly 5% of the land area,” he said: Dish Network went for breadth, bidding 15 cents MHz/POP “to get near-national coverage of about 99% of the population within about 88% of the land area.” Rollins questioned why Dish would spend $1 billion on spectrum given the cost of building its proposed 5G network.

Piecyk had predicted Verizon would pursue nationwide mid-band, which didn’t happen. The carrier got “deep spectrum in the big markets where it needs it the most,” he said: “Their goose eggs were in second-tier markets.” Verizon will likely use CBRS for LTE capacity augmentation, he told investors. “This could include implementations in small cells and macro towers, but this was not a positive data point for tower companies.”