A top Comcast executive said during a hearing before the Senate Judiciary Committee yesterday that it had tried to sell its AWS spectrum to “virtually every wireless carrier in the country” before forging a multi-billion dollar deal with Verizon Wireless.
“We engaged in discussions with virtually every wireless carrier in the country with regard to this spectrum,” Comcast Executive Vice President David Cohen said Wednesday.
The cable operator held talks with T-Mobile USA in 2010, Cohen said, but declined to provide specifics about other negotiations because of nondisclosure agreements. Virtually all of the country’s top operators are on the hunt for spectrum, and it was the need for additional airwaves which spurred AT&T’s attempted takeover of T-Mobile USA.
AT&T, Sprint and U.S. Cellular declined to comment on whether they had ever discussed buying Comcast’s AWS spectrum. A spokesman for MetroPCS also would not respond directly to Cohen’s statements, “but we’ve said numerous times that we’re considering all options and are looking opportunistically at spectrum acquisition.”
The AWS transaction, announced shortly before AT&T abandoned the T-Mobile deal, was seen as a major coup for Verizon. Verizon also inked a cross-marketing deal and formed a joint venture with its cable partners at the same time the AWS sale agreement was made.
Comcast is one of a group of four cable operators that banded together as SpectrumCo during the FCC’s 2006 spectrum auction to pay $2.4 billion for more than 150 AWS licenses covering about 94 percent of the U.S. population. Comcast, Time Warner Cable, Bright House Networks and Cox Communications originally planned to use the airwaves to build their own network, but eventually gave up on the strategy after it became clear they would not be able to compete against incumbent providers.
Cohen was the only representative from SpectrumCo present at the hearing. Comcast holds the largest portion of the group’s spectrum holdings and will receive $2.3 billion if the $3.9 billion transaction goes through.
Cohen and Verizon Communications General Counsel Randal Milch were on Capitol Hill to defend the spectrum sale against critics who said the transaction would consolidate too much spectrum in the hands of Verizon Wireless and quash competition and innovation in the cable space.
The hearing was led by committee chairman Herb Kohl, a Wisconsin Democrat who held a hearing on AT&T’s merger with T-Mobile last spring and eventually asked the FCC and Justice Department to block the transaction.
Kohl expressed concern that Verizon’s spectrum purchase could make it harder for smaller wireless operators to compete and also voiced reservations that the marketing side deal and joint venture could amount to a de-facto non-compete agreement between the companies.
“Many now wonder if these agreements that we are examining today will roll back these advances in competition and even amount to a truce between one of the two largest phone companies and over 70 percent of the cable TV industry,” he said. “Having won the battle for competition by blocking last year’s AT&T/T-Mobile merger, are we now in danger of losing the war?”
Milch testified that Verizon needs the spectrum to address a shortage that could hit some of its markets as early as next year and denied it would lead the company to be less competitive with its FiOS service, a challenger to the very cable operators it formed a joint marketing agreement with.
“Verizon is full speed ahead with FiOS and nothing in these commercial agreements – to which Verizon’s wireline FiOS group is not even a signatory – changes this commitment,” he said.