Verizon Wireless Seen as Leading Contender for 700 MHz Spectrum

“I expect that Verizon Wireless will make a play for at least 20 MHz of the upper band,” Rebecca Arbogast, an analyst with Stifel Nicolaus, told us Thurs.: “Whether they go for all 30 MHz depends in part on whether they are participating offensively, in other words to pick up spectrum they really need, or defensively, to block a potential competitor from picking up spectrum, particularly spectrum at a reasonable price. If the latter, they may bid up the spectrum, but in the end may let it go on the theory that there are limits to what can be done with 10 MHz.”

“I expect Verizon Wireless to make a play in a big way for the 700 MHz spectrum,” said an industry lawyer. “T- Mobile is also interested. Verizon wants 30 MHz of the spectrum -- the upper band -- if they can get it. And they have the deep pockets to go after it, if that’s what they want.”

“I keep hearing Verizon and T-Mobile,” said a 2nd source: “That’s why Verizon has been so active in the buildup to the auction and has been a main opponent of the Cyren Call plan, which takes spectrum away from the commercial allotment.” A carrier source said: “Verizon has made it very clear they want that spectrum and they will do anything, including throwing public safety under the bus, to get it.”

Verizon Pres. Dennis Strigl said last year at the CTIA show, when he was CEO of Verizon Wireless, that the carrier would participate in the AWS auction or 700 MHz auction, “but not both.” Verizon Wireless was one of the major winners in the former auction last summer, but sources say the carrier’s strategy appears to be evolving.

At a briefing for reporters this week, AT&T officials told us they're still looking at whether to make a play for the 700 MHz spectrum. “We're always looking at the 700 MHz auction but we haven’t made a final decision on whether we'll participate in that or not,” Kris Rinne, senior vp- architecture & planning at AT&T, told us. Rinne said there are technical complications to adding service in a new spectrum band: “It could add complexity in terms of the design, and depending on how big the chipsets are it could add some size.”

Richard Burns, pres. of network services for wireless at AT&T, said 700 MHz forces a carrier to balance interests. For example, offering 700 MHz nationwide could limit the need for customers to roam on other networks. But it also would make cellphones more expensive. “It’s very cost effective. You can build cells that cover a lot of footprint for less dollars per square foot coverage,’ he said: “The other side of that is, what about the device? We've got quad devices out there now. You've got to think about putting 700 MHz… in all the devices that you've got. That’s not an insurmountable problem, but there is a balance.” Burns said AT&T was still evaluating how it will use the AWS spectrum it bought in the summer. “We don’t think we have any spectrum needs that we have to be fulfilled to meet our business plans,” Burns said: “On the other hand, you can always make the argument that spectrum is like beachfront property -- especially the lower the number, the closer to the water you get. I don’t know if you can ever own too much prime, beachfront property.”

Sprint Nextel CEO Gary Forsee said in Feb. that the carrier didn’t plan to pursue the 700 MHz spectrum, saying Sprint has “the best spectrum position of any of the carrier competitors.” Sprint could still play in the auction through its venture with cable operators, SpectrumCo, which was a major bidder in the AWS auction. “I'm not going to comment on our ongoing strategy for 700 MHz or not,” said Atish Gude, senior vp for mobile broadband operations at Sprint Nextel: “With the spectrum we have right now… we have a lot. There is a direct correlation to the amount of bandwidth we can deliver.”