Verizon Wireless admits to hoarding spectrum, ends any argument about a spectrum crunch

Recently, the Federal Communications Commission (FCC) received a record-breaking $44.9 billion worth of bids in the spectrum auction of AWS-3 airwaves. As I noted at the time, this was proof itself of the absurdity in wireless carriers claiming that Title II rules would deter industry investment.

But the auction also proved that wireless carriers, such as Verizon, should stop crying about a “disastrous spectrum crunch” coming if regulators don’t do precisely what the major carriers want. It wasn’t even three years ago that Verizon told the FCC that they were running out of spectrum. Verizon was telling the FCC this because they were pushing the FCC to approve a spectrum and marketing deal with the cable industry. Of course, Verizon was at the same time telling investors in 2012 that they had more than enough spectrum for a variety of future projects.

Fast forward to today and after spending $10.4 billion at the recent spectrum auction, Verizon must be ready to put that new spectrum to use!

In a conference call with investors, Tony Melone, Verizon Communications’ executive vice president of network, said that “entering the auction there was no markets where we felt compelled to acquire spectrum, irrespective of the price.” Verizon did not feel pressure to aggressively bid for spectrum because it already had at least 40 MHz of AWS-1 spectrum in many U.S. markets, especially in the eastern United States, Melone said. – FierceWireless

So, Verizon essentially spent over $10 billion worth of spectrum that they didn’t even need. Meanwhile, countless smaller companies are begging for even the slightest piece of this hugely valuable public resource. Now, Verizon and AT&T can continue jacking up the price that smaller companies must pay them if those smaller companies want to use any of the new spectrum.

As Michael Prior, CEO of Atlantic Tele-Network, noted to CNET, Verizon and AT&T are sitting on substantial amounts of spectrum all over the country and do nothing with it while “smaller players are scraping by.”

This type of hoarding has been going on for years now. As I have written about a number of times, major wireless carriers threaten government regulators during the time of new spectrum auctions that the wireless industry will collapse if the major carriers aren’t able to purchase and horde all available spectrum. This even though the FCC has publicly admitted last year that AT&T and Verizon held a combined share of approximately 70% of all low-band spectrum licenses.

What happens when a smaller wireless carrier actually purchases a small but important piece of spectrum to use on their network? In the case of C Spire Wireless several years ago, they are forced to deal with an angry AT&T who paid off worked with “chip makers and standards bodies” to create devices that only ran on AT&T’s network within that spectrum.