Verizon And T-Mobile Swap Spectrum In $173 Million Deal

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Wireless rivals Verizon and T-Mobile, struck a behind the scenes deal for $173 million to swap a horde of AWS-1 and PCS spectrum licenses in various markets across the country, according to a deal T-Mobile disclosed in its value that they filed with the Securities and Exchange Commission last week.  The companies described it as a “standard procedure” and that, “These assignments involve only the transfer of spectrum; no network or other assets or customers are involved.  The assignments are, in all markets, intra-market license exchanges that will enable more efficient operations resulting from larger blocks of contiguous spectrum and/or the alignment of spectrum blocks held in adjacent markets. All of these intra-market exchanges involve the exchange of an even amount of spectrum, where neither Party will increase its spectrum holdings in the market.”

When all is said and done, both Verizon and T-Mobile will hold on to the same amount of spectrum, it will just be redistributed.  T-Mobile has between 15 and 120 MHz of spectrum in counties where spectrum was reassigned and Verizon will hold on to 72 and 167 MHz of spectrum.  The deal is to close during the fourth quarter and will include spectrum swaps in parts of Arkansas, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Minnesota, Mississippi, Missouri, Montana, New York, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee and Virginia. The largest markets that Verizon will gain spectrum are in Memphis, Tennessee and St. Louis where Verizon will get 10MHz of PCS spectrum, although there are also includes smaller cities or areas out of major cities.

The most important factor in these swaps is the ability to have larger blocks of contiguous spectrum, rather than broken blocks here and there. By aligning the spectrum blocks, carriers can handle calls more efficiency when it comes to handing off calls.  It also helps greatly when operations are at the edge or fringe of the market boundaries – here the carrier can use the same frequency blocks in both markets and reduce coordination burdens.  While fierce competitors, Verizon and T-Mobile know a good thing when they see it.  By swapping this spectrum, both competitors can improve the service they can provide their customers and this is something that benefits both the wireless subscribers and the two carriers – a true win-win situation.