Carriers Exchange Spectrum Licenses After FCC Auctions

The FCC recently completed its incentive auction of 600 MHz licenses, unused by television broadcasters. Surprisingly, AT&T and Verizon, the two largest carriers in the United States were not very active in the auctions – in fact, Verizon spent nothing on bidding for the unwanted licenses, although they were expected to bid for some of them. However, in the months since, all carriers have announced that they have since exchanged some licenses or purchased them from each other in a bid to have the best possible position on the spectrum. Brian Goemmer, the president of Allnet Insights & Analytics, a spectrum analysis firm said that “these kinds of spectrum trades occur monthly between all of the big players; AT&T, Verizon, T-Mobile, Sprint and U.S. Cellular.” Even T-Mobile, who spent $8 billion acquiring low-band spectrum in the recent auctions, have got involved. This was by far the most amount of money spent by any network operator in the auctions. They are thought to have acquired around 45% of the available spectrum with their bids.

The FCC are responsible for overseeing every aspect of trading and selling spectrum licenses. In a public interest statement to the FCC, Verizon and Sprint said they had exchanged licenses covering certain locations, which included Oregon, Washington and others, resulting in an even exchange in 11 of the 13 markets. The remaining two markets have Verizon gaining an additional 10 MHz in Danville, Illinois, while in Bremerton, Washington, Sprint will acquire an additional 5 MHz. The statement further confirmed that the transitions would go unnoticed by customers, who would not notice any discontinuation or impairment of their service.

Verizon also acknowledged that they had exchanged spectrum with Sprint in its quarterly filing with the Securities and Exchange Commission (SEC), who are an independent, federal agency responsible for protecting investors and overseeing key participants in the world of securities. Verizon said that no money had been involved in the transaction, and there had been no financial gain on the part of either company. At the same time, T-Mobile said it had finalized an agreement with a third-party to exchange some spectrum licenses, and have since finalized another deal to exchange certain PCS and AWS licenses. In the fourth quarter Verizon confirmed it has a similar agreement in place with AT&T regarding these licenses.

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