Last month, a deal was struck between T-Mobile and Verizon to ease the way for Verizon to acquire what it sees as much needed unused spectrum. As background, Verizon has been attempting to purchase spectrum from a few cable operators and a smaller wireless company. T-Mobile objected to the deal, on the grounds that it would put T-Mobile and its customers at a huge competitive disadvantage to allow the sale. The FCC and the Justice Department are scrutinizing the deal, and the T-Mobile opposition made it all the harder to get a deal approved. To put T-Mobile at ease, Verizon and T-Mobile worked out a deal where Verizon would agree to sell some of its spectrum to T-Mobile in return for dropping its opposition to Verizon’s purchases and allowing it to acquire the spectrum it desired. Just Monday, we’re getting an indication that the deal may have been a success, as the FCC is giving indications it’s preparing to approve the deal. The deal isn’t done yet, however, as it still has to clear approval with the Justice Department.
Still, the agreement between Verizon and T-Mobile is a great example of how deals could be worked out on the secondary market between spectrum owners. By working outside the bounds of the regulatory quagmire, the two wireless giants were able to come to an amicable agreement that would benefit both of their companies, thus benefiting consumers who are customers of both companies. All wireless providers are in desperate need of spectrum, and this seems to be a success story in how we might get to the point where wireless providers get the resources they need. When companies work out private arrangements to make best use of their spectrum assets to benefit their customers, everyone wins.
Regulatory delays caused by the FCC, FTC and Justice Department are making it so that it takes years to approve deals between telecom companies. According to a recent study conducted by Navigant Economics which was presented at ACI’s recent Capitol Hill event on the coming spectrum crunch, the average time over the past three years it took for spectrum re-allocation approval was 348 days—nearly a year. At the speed technology progresses, the economy surely can’t afford such delays. These delays cost the wireless providers money, and it costs consumers money through lost consumer welfare.
The FCC should move to make sure that spectrum deals get approved faster, because consumers, and the country, can’t afford to be left behind in the world of wireless broadband. Technology moves fast, and the world is quickly becoming more and more wireless. Currently, nearly half of all Americans own a smartphone, with that number continuing to rise. American consumers and businesses can’t afford to not have high-speed wireless broadband that we would otherwise have if it weren’t for a tangled government bureaucracy. Education, commerce, health care, national security — these and other industries will effected by the dearth of spectrum. If policymakers are concerned about the state of the economy, they shouldn’t ignore the regulatory problems facing broadband providers and the coming spectrum crunch.
Zack Christenson writes on digital tech issues for the American Consumer Institute