The cable industry is hoping to get rid of $3.6 billion in wireless spectrum by selling it to Verizon Wireless, the cable companies Comcast, Time Warner, and Bright House announced on Friday.
If the deal is approved, the Federal Communications Commission could get rid of something as well: an embarrassing problem it had trying to free up more spectrum through controversial policies while cable companies sat on a big, unused chunk of it.
Comcast, Time Warner, and Bright House had entered a joint wireless venture called SpectrumCo more than five years ago. Sprint was at one time a partner in the venture but soon dropped out. The companies acquired their spectrum in a 2006 FCC auction of licenses in the advanced wireless services band, a section of spectrum where T-Mobile, Cricket, MetroPCS, and others operate.
The cable companies never began deploying their wireless network despite their plan to get into the mobile business. The delay started to provoke questions, and FCC Chairman Julius Genachowski began pushing this year to free up more airwaves for mobile companies. Genachowski’s plan called on some TV stations to sell off their spectrum and to go out of the broadcasting business.
Broadcasters questioned why they were being asked to move when cable had a large chunk of unused spectrum.
National Association of Broadcasters Chief Executive Gordon Smith urged Congress in January to study the cable companies' “warehousing” of spectrum.
"If there is truly a 'spectrum crisis,' then allowing companies the size of [Time Warner Cable] to hoard airwaves should not be permitted," he wrote.
If cable companies sell spectrum, that could solve a problem for the FCC as it continues to push for many broadcasters to join auctions aimed at raising revenue. Congress is considering legislation to do that.
“It has been an embarrassment for the FCC that the cable industry has not yet deployed assets to support the block, and getting that spectrum into use expeditiously would be a clear win for the FCC,” Craig Moffett, an analyst for Sanford Bernstein, said in a note on Friday.
But Moffett also points out a reason the FCC may question the deal. It could be hard for T-Mobile to find a path forward, in the event the struggling merger with AT&T fails, without buying the cable spectrum that would be in the same band as T-Mobile’s.
The cable deal with Verizon “would amount to an unmistakable step towards the duopolization of the U.S. wireless market, inasmuch it would leave T-Mobile, once again, stranded without a 4G strategy,” Moffett writes.
Public-interest groups nevertheless saw the spectrum sale to Verizon as a generally positive development.
“Spectrum is better held in the hands of those who will use it, as opposed to those who don't,” said Harold Feld, legal director at Public Knowledge.