Verizon Claims the Spectrum Edge

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Verizon (NYSE: VZ  ) sees itself as sitting on enough of that invaluable -- and finite -- mobile resource called wireless spectrum that it's set for the next four to five years. That's what Verizon's CFO, Fran Shammo, told an audience at the Goldman Sachs Communacopia Conference.

Verizon's spectrum vault swelled as a result of a blockbuster deal it made late last year with several cable companies. The carrier paid $3.9 billion for a cache of unused spectrum held by Comcast (NYSE: CMCSA  ) , Time Warner Cable (NYSE: TWC  ) , Bright House Networks, and Cox Communications.

That deal, which was finally approved last month by the Federal Communications Commission -- though not before it had to address some sticky anticompetitive issues -- was "an absolute strategic acquisition for us," said Shammo.

And it was a kick in the teeth for Verizon's competitors. Acquiring wireless spectrum is a zero-sum game. For every winner, there is a loser. Verizon's grab of 122 Advanced Wireless Services spectrum licenses with the potential to cover 259 million people took that spectrum off the table for rivals AT&T (NYSE: T  ) , Sprint Nextel (NYSE: S  ) , and the rest.

On the spectrum horizon
Even though Verizon is feeling pretty comfortable sitting on its spectrum cushion for the next several years, that doesn't mean it's not hungry for more. The FCC is planning on auctioning off a range of frequencies that was previously reserved for broadcasters but will be made available to wireless carriers to bid on in 2014. You can bet Verizon, AT&T, Sprint, T-Mobile USA, et al, will be fighting for what they feel are their fair shares.

Speaking of fair shares, AT&T's CEO, Randall Stephenson, at the same Goldman Sachs conference, said he "applauded" the FCC's plan to explore at an upcoming meeting means to more equitably parcel out spectrum by using a so-called spectrum-screen. If the screening criteria show a carrier having too much spectrum, then its chances of being allowed to get more will be diminished.

Stephenson must be counting on the FCC looking askance at the size of Verizon's spectrum vault when it comes around asking for more.

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Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool has a disclosure policy.
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Read/Post Comments (2) | Recommend This Article (3)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 20, 2012, at 8:16 PM, conradsands wrote:

    Consumers are finally noticing that AT&T and Verizon = The Most Expensive Wireless Plans in America. We know where Verizon and AT&T (both near the top for corporate lobbying) get all that money to run commercials 24x7, pay out huge “fat cat” executive bonuses and hire armies of lawyers and lobbyists to try to push the U.S. market into a wireless industry duopoly -- the American consumer. This is how AT&T and Verizon fashion themselves as brilliant … with their political use of money.

  • Report this Comment On September 20, 2012, at 8:17 PM, conradsands wrote:

    For the post-paid customer, the fact remains that Sprint is the only U.S. carrier to offer them the iPhone experience with unlimited data plans starting at $79.99 per month. Plus, Verizon now charges its customers $30 to upgrade to a new phone when they renew. AT&T charges $36. But Sprint only charges $18. An investment writer recently summed it up best: “Sprint offers the best value proposition for a new smartphone user. I got my first smartphone on Sprint because a new AT&T or Verizon data plan is outrageous. My Sprint plan includes 450 afternoon mobile-to-landline minutes, unlimited other minutes, and unlimited texting and data for $79.99. Unlimited AT&T or Verizon plans would approach $150, and to get a comparably-priced package, I'd have to settle on limited data or texting plans, which I'd have to constantly try to not blow through. Why get a smartphone if you can't have fun using it?” Sprint also placed first in the industry in customer satisfaction, according to results from the 2011 and 2012 American Customer Satisfaction Index. They also just received the J.D. Power award for being top-ranked in the consumer wireless purchasing experience.

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