T-Mobile USA buys 700MHz A Block from Verizon

The US arm of operator group Deutsche Telekom, T-Mobile USA is  to acquire spectrum licenses for the 700MHz A Block from Verizon Wireless.

The deal has been broken down into two parts; under the first, T-Mobile USA will pay $2.365bn to Verizon for 15 lower 700MHz A Block licenses and under the second, Verizon Wireless will transfer eight further lower 700MHz A Block licenses in exchange for various AWS and PCS licenses in markets including Los Angeles, San Francisco, Dallas, Atlanta and Detroit.

The two carriers will also realign spectrum blocks in northern California and the Atlanta area as part of the transaction. The deals are subject to regulatory approval and are expected to close in the first half of 2014.

The move could be good news for smaller US players. Citing interference concerns with broadcast TV in the A block, AT&T successfully lobbied for the creation of a separate band, Band 17, which got AT&T out of using A Block. Meanwhile Verizon’s approach was to  sell off some of its A block spectrum and concentrate on the upper C block where it almost has enough spectrum to roll out a nationwide network in the 700MHz band.

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Many of the smaller carriers in the US, a lot of which operate on a regional level, only acquired A block spectrum. And since AT&T effectively marginalised the A block, these smaller players claim to have struggled to get hold of devices. So T-Mobile’s growing support for the A block could have knock on benefits to regional carriers in the US.

In April last year, the US Department of Justice’s (DoJ) Antitrust Division called on telecoms regulator the Federal Communications Commission (FCC) to more aggressively regulate the amount of spectrum that the country’s larger operators are able to own.

The DoJ’s principal concern was that acquisitions of spectrum “should not be used to create or enhance market power”, and that rules should be established that ensure the smaller nationwide networks have an opportunity to acquire such spectrum.

The FCC had already outlined ambitious plans in February to make more spectrum available to the market. The regulator aims to make 500MHz of additional spectrum available within ten years, predominantly through freeing up spectrum used by television broadcasters in the country.