Verizon Wireless and T-Mobile reach AWS spectrum agreement

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Verizon (NYSE: VZ) Wireless and T-Mobile jointly announced on June 25 an agreement for T-Mobile to buy a portion of the AWS (advanced wireless services) band that Verizon Wireless is buying from a group of cable companies. The spectrum acquisition will allow T-Mobile the spectrum in several markets that it needs to build out its LTE network. In addition, both companies are agreeing to a spectrum swap that would allow each greater contiguous spectrum in a number of markets.

The spectrum buy includes an undisclosed cash payment to Verizon by T-Mobile. The agreement is contingent on regulatory approval.

"The agreement with T-Mobile is further evidence of the importance of a secondary spectrum market to give companies the flexibility to exchange or acquire spectrum to meet customers' growing demands for wireless data services," said Dan Mead, president and CEO of Verizon Wireless in a prepared statement. "The AWS licenses we'll acquire from T-Mobile and through SpectrumCo, Cox and Leap will be used to add capacity to our 4G LTE network."

According to a statement from T-Mobile, the added spectrum will allow the company to gain coverage for 60 million people, especially in Philadelphia, Washington, Detroit, Minneapolis, Seattle, Cleveland and Columbus, Ohio along with a number of other cities. The swap with Verizon will allow that company to add coverage for 22 million people, according to the statement.

"This agreement will provide T-Mobile with critical AWS spectrum, enhancing both network capacity and performance and allowing us to meet the growing consumer demand for 4G mobile broadband," T-Mobile CEO and President Philipp Humm said in a prepared statement provided to the news media. "This is good for T-Mobile and good for consumers because it will enable T-Mobile to compete even more vigorously with other wireless carriers. We anticipate FCC approval later this summer, in time for us to incorporate this new spectrum into our network modernization and the rollout of LTE services next year."

Adding the AWS spectrum, and refarming the 1900 MHz frequencies will allow T-Mobile to deploy LTE system wide in 2013. The spectrum deal with Verizon Wireless is conditional on approval by the FCC, which is expected since it represents a significant divestiture of spectrum from the deal that Verizon Wireless has with the cable companies.

This agreement is a change from T-Mobile's recent opposition to the Verizon Wireless spectrum buy in which T-Mobile filed an objection with the FCC saying that the buy was contrary to the public interest. "Prior to these divestitures, we believed the transaction represented an unfair concentration of spectrum in the hands of the nation's largest wireless carrier," a T-Mobile spokesperson told FierceMobileIT. "The significant spectrum divestitures by Verizon announced today are good for competition and consumers."

The added spectrum will allow T-Mobile to continue its refarming at a greater pace than was possible previously, which will allow users with iPhones as well as international GSM users to have access to T-Mobile. It will also speed up the implementation to LTE as T-Mobile frees up its current use of AWS more quickly.

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