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Justice Dept., FCC Chairman OK Verizon Purchase Of Spectrum

Washington – The Federal Communications Commission (FCC) chairman has endorsed a modified agreement that will let Verizon Wireless buy unused AWS-band spectrum from multiple cable companies and enable the cable companies and Verizon to cross-promote each others’ services.

The Department of Justice has approved the modified agreement, the FCC said.

Verizon is seeking the unused spectrum to improve its 4G LTE network capacity.

The modified transaction, if approved by the full commission, will also pave the way for a planned sale of some Verizon AWS-band spectrum to spectrum-constrained T-Mobile. Verizon conditioned the sale of its spectrum to T-Mobile on the FCC’s approval of Verizon’s deal with the cable companies.

To expand its LTE-network capacity, Verizon wants to purchase 20MHz of spectrum from SpectrumCo, a consortium consisting of Comcast Corp., Time Warner Cable and Bright House Networks for $3.6 billion. It also wants to buy another 20MHz from Cox Communications for $315 million. The agreement also called for the companies to sell each other’s services, even in overlapping markets, and collaborate on technology innovations.

Once that deal goes through, T-Mobile will buy AWS spectrum from Verizon and swap other AWS spectrum with Verizon. That deal, which involves spectrum in 218 markets, would aid T-Mobile in following through on its plans to launch 4G HSPA+ services in its 1,900MHz band and deploy 4G LTE in the AWS band in 2013.

 In a statement, FCC Chairman Julian Genachowski said Verizon and the cable companies “have made a number of binding pro-competitive commitments and will also make fundamental changes to their agreements.”

Previously, “a rigorous review by the Federal Communications Commission and Department of Justice staffs revealed that the deal as proposed by Verizon Wireless and the cable company owners of SpectrumCo posed serious concerns, including in the wired and wireless broadband and video marketplaces.”

Under the modified agreement, “Verizon Wireless has undertaken an unprecedented divestiture of spectrum to one of its competitors, T-Mobile, and has committed to accelerate the build-out of its new spectrum and enhance its roaming obligations,” Genachoswki said. “In addition, the companies’ commercial agreements will be modified to, among other things, preserve Verizon’s incentives to build out FiOS, increase wireless competition, and ensure that the proposed IP venture is pro-consumer and that its products cannot be used in anti-competitive ways.”

The modified transaction “will preserve incentives for deployment and spur innovation while guarding against anti-competitive conduct,” he continued. “And vitally, it will put approximately 20MHz of prime spectrum — spectrum that has gone unused for too long — quickly to work across the country, benefiting consumers and the marketplace.”