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Nov. 17, 2008

Late Friday afternoon, the FCC gave final clearance to Verizon Wireless’ $4.7 billion bid of a nationwide collection of regional licenses at the 700 MHz auction earlier in January.

By doing this, the Federal Communications Commission is in fact refusing Google’s request to impose a stronger open-access condition and revising a key component of its merger review policy.

The FCC action, which also requires Verizon Wireless to divest 10 megahertz in a New Jersey market, follows the FCC’s approval of the $28 billion Verizon Wireless-Alltel merger and cellular association CTIA’s withdrawal of a legal challenge to the C-Block open-access provision.

The 700 MHz licenses picked up by Verizon Wireless resulted in the carrier exceeding the 95-megahertz threshold in 17 markets, but after further review, the FCC concluded the newly acquired spectrum would not pose competitive harm in those markets.

At the same time, the FCC said in the future it would count spectrum won at auctions toward the 95-megahertz spectrum screen.

In recent merger rulings and continuing through its ruling on Verizon Wireless’ 700 MHz licenses, the FCC has not factored spectrum acquired at auctions into the 95-megahertz screen because winning bidders have been unable — for a variety reasons — to immediately secure the airwaves from the government to put it into operation.

The two Democrats on the Republican-controlled FCC welcomed the merger review change.

“Until today, the commission applied its spectrum screen to licenses obtained via merger or acquisition, but not to licenses acquired via auction. As we have stated before, this double standard makes no sense. Accordingly, we are pleased that today’s item announces that, from now on, the commission will apply its spectrum screen to both forms of spectrum acquisition,” stated Commissioners Michael Copps and Jonathan Adelstein.

As a result of the Nov. 4 elections, which gave Democrats control of the White House and larger majorities in Congress, there could be efforts to scrutinize wireless industry consolidation and revive the spectrum cap. The 55-megahertz cap was abolished five years ago.

The spectrum cap represented a more formalized policy than is the spectrum screen that’s been employed by the FCC since 2003.

Regarding the FCC’s rejection of Google’s petition for stricter C-Block open-platform requirements, Copps and Adelstein expressed measured support for more clarity.

“When we voted to establish service rules for that spectrum, we both expected that the C-Block winner would observe the openness rules for its own devices as well as those sold by third parties,” the commissioners stated.

“And we believe today that the language in the commission’s rules establishes this legal requirement. However, to the extent that any parties believe the language is not clear enough, we would have preferred that the commission dispel any potential confusion by making this point directly in today’s item.”

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Source: Verizon Wireless.