Verizon Wireless, T-Mobile USA agree to spectrum exchange

On Monday, Verizon Wireless announced an agreement with T-Mobile USA to exchange specific spectrum in the AWS (Advanced Wireless Services) band. Under the agreement, both companies also will receive additional spectrum depth in specific markets to meet LTE (Long Term Evolution) capacity needs and enable LTE expansion.

Since this agreement includes spectrum that will be purchased by Verizon Wireless (New York) in its transactions with SpectrumCo, Cox and Leap, this agreement is contingent on the closing of those transactions, says the company.

Verizon’s purchase of additional spectrum from cable companies is currently being reviewed by the U.S. Department of Justice. T-Mobile USA (Bellevue, Wash., USA), along with Sprint (Overland Park, Kan., USA), was an opponent of the deal saying it could potentially hurt competition in the wireless and cable industries.

According to to Nick Marshall, principal analyst of Mobile Networks at ABI Research (Oyster Bay, N.Y., USA), this new deal with T-Mobile can potentially help Verizon’s cable deals gain government approval.

“It makes Verizon look like less of a spectrum hoarder to the government,” says Marshall.

The agreement between the two service providers includes a number of intra-market spectrum swaps,  and exchanges of spectrum between the companies in numerous markets which result in an overall net transfer of spectrum from Verizon Wireless to T-Mobile and a cash payment from T-Mobile to Verizon Wireless.

T-Mobile will have a net gain of spectrum in Philadelphia, Washington D.C., Detroit, Minneapolis and Seattle. The two telecom operators will swap spectrum in the following markets: New York, Chicago, Boston, Miami, Atlanta, Tampa, Pittsburgh, Sacramento.  Net Transfer of spectrum to Verizon and contiguity swaps will occur in San Francisco and San Diego

According to the T-Mobile spokesperson, the deal will allow the company to deploy LTE more effectively in 15 of the top 25 markets, as well as gain contiguous spectrum in over half of the top 100 markets.

 “We believe that with this transaction it will now be possible to launch 20 MHz of LTE in 88% of the top 25 markets,” says the T-Mobile spokesperson.

“T-Mobile USA already had AWS spectrum and I think this is going to enhance their coverage,” says Marshall.  “It’s going to be good for them. “

Financial terms of the agreement are not being disclosed.

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