Verizon Communications chief executive Lowell McAdam has announced that he is supporting the AT&T T-Mobile merger. He warned that the Government has no choice but to let the deal go though unless they want to fix the current spectrum problems. He went on to say “We need to be very thoughtful on what the impacts would be to the overall industry if this is a way to regulate the industry without actually passing regulation.” The current telcos need more wireless spectrum to continue expanding and operating efficiently so they have resorted to acquiring other companies.
There are telcos out there that have wireless spectrum but lack the captial to build it out. McAdam touches on this issue as well “I have taken the position that the AT&T merger with T-Mobile was kind of like gravity,” McAdam told investors. “It had to occur, because you had a company with a T-Mobile that had the spectrum but didn’t have the capital to build it out. AT&T needed the spectrum, they didn’t have it in order to take care of their customers, and so that match had to occur.” He states that if the Government blocks this deal without providing a solution to the spectrum problem, it will undoubtedly affect consumers negatively. Another example is from a company called Clearwire posted at hedgefundlive.com “There are many carriers with more spectrum than they currently know what to do with. Take Clearwire for example, they currently have 46bln Mhz-POPs of spectrum serving a tiny 4.4mln subscribers. Their growth in retail subs has slowed and the company is now trying to sell some of its spectrum. Apparently, it is having trouble doing so as this spectrum has been for sale since the middle of last year.”
The US Government controls much of the unused Wireless Spectrum in the United States and has not done much with it.
“The Federal government controls massive amounts of spectrum that are currently going unused or underused, this spectrum could be reallocated to the private sector should the need arise. As a matter of fact, the NTIA and the FCC have been tasked with reallocating 500Mhz of spectrum over the next 10 years (with 300Mhz of the 500Mhz goal allocated over the next five years) for the use of broadband starting with 115Mhz of spectrum currently being used for weather satellite and military radar systems (15Mhz in the 1695-1710Mhz band and 100Mhz in the 3550-3650Mhz band).”
If the Government successfully blocks the deal they will need to figure out what to do with the unused wireless spectrum’s they are holding onto. I am sure some of the spectrum can be spread out to the wireless heavyweights out there.
The US Government is still pursuing the AT&T T-Mobile deal in court since the suit started last month.