FCC presses Verizon on mobile capacity crunch

Written on:March 9, 2012
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Verizon has claimed that it will start running out of mobile broadband capacity as soon as 2013 unless it gets its hands on the cable operators’ unused spectrum. But the Federal Communications Commission has some questions about the math Verizon used to reach that conclusion, as well as the deal it struck with those cable providers to combine their wireless and wireline might.

On Thursday, the FCC sent a letter to Verizon (PDF), asking it to provide a slew of documentation on how it arrived at its rather dire capacity forecasts. Verizon claims that, at its current rate of traffic growth, which is roughly doubling each year, it will reach the capacity thresholds on both its 3G EV-DO and LTE networks beginning in some markets by the end of 2013, and across its entire network by the end of 2015. Unless it can get new spectrum — i.e., the cable operators’ 20 MHz of AWS spectrum — its customers’ connection speeds and service quality will start suffering.

In separate letters to the cable operator consortium that owns the AWS licenses, SpectrumCo, and its individual members — Comcast, Time Warner Cable and Bright House Networks — the FCC asked for an explanation why they were unable to use that spectrum to launch their own competing wireless network as the consortium originally intended.

Comcast has gone into detail about how SpectrumCo tried to make a competing wireless service work and failed in the process, but Comcast CFO Michael Angelakis recently got into hot water with FCC Commissioner Robert McDowell for stating at a conference that SpectrumCo never planned to use its AWS airwaves. The FCC now wants a full accounting of any attempts the cable operators made over the last six years to build any sort of wireless network. In its letter to Comcast, the FCC called out Angelakis’ statements, asking for an explanation.

And finally, the FCC wants all parties to come out with the details of their joint marketing agreement. In areas where Verizon doesn’t offer its fiber-to-the-home FiOS service, Verizon and the cable operators are teaming up, offering the latter’s cable broadband and programming and the former’s mobile voice and data services in one big bundle. The deal has enormous competitive implications, and we’ve already seen its initial manifestation in San Francisco, Seattle and Portland, Ore. Consumer advocacy groups like Public Knowledge have been demanding that Verizon and the cable operators be more transparent about the deal. With the FCC’s follow-up, they may well get their wish — if the FCC makes the information public, that is.

Requests for follow-up information are fairly routine in any spectrum purchase before regulators, but the sheer volume of information the FCC is asking for – Verizon’s letter itemizes 37 separate requests for documentation alone – and the content of those questions imply that this deal isn’t simply going to sail through.

Verizon VP of Policy Communications Ed McFadden said that Verizon is confident that the deal will ultimately be approved by the end of the standard 180-day time clock (about four and a half months away). In a statement, McFadden said:

We believe getting previously unused spectrum into the hands of consumers is strongly in the public interest. We will continue to respond completely and rapidly to the questions about both the spectrum transfer and the separate cross-marketing agreements at the FCC and Department of Justice, thereby demonstrating the benefits they bring to consumers.

Verizon and the cable operators have also tried to decouple their joint marketing agreement from the spectrum sale, saying the two are completely unrelated. But the FCC isn’t buying that argument. In a statement given to the Washington Post, spokesman Neil Grace said the FCC “has concluded that portions of the commercial agreements are inseparable from the proposed license transfer and related wireless competition issues.”

Image courtesy of Flickr user turtlemom4bacon.

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