FCC puts hold on QCOM spectrum sale

Four months ago, carriers opposed to AT&T’s acquisition of T-Mobile and its spectrum asked the FCC to delay Qualcomm’s planned $1.9 billion sale of its 700 MHz (former UHF Channel 55) FLO spectrum to AT&T.

At the end of its 180-day review of the spectrum sale on Monday, the FCC sent a letter to Qualcomm saying that the sale of the spectrum will be considered simultaneously with the (much larger and slower) review of the very controversial (and larger) AT&T/T-Mobile acquisition.

As noted by eWeek, Qualcomm shot back that it thinks that the sale should be consummated without delay:

FCC should approve the pending AT&T-Qualcomm spectrum sale now because of the clear benefits to the public from the sale that stand on their own and are totally unrelated to the proposed AT&T-T-Mobile merger.

If the merger gets approved, the current betting is that it would be heavily constrained by conditions. I’m not optimistic about the spectrum sale surviving those conditions.

With the FCC’s ruling, the best case for Qualcomm is that the T-Mobile acquisition be denied. AT&T will badly need to additional Qualcomm spectrum and the antitrust issues largely go away.

The 2nd best case is that Verizon Wireless buys the spectrum if AT&T doesn’t. However, given the sickly nature of the rest of the US cellphone industry, Verizon will know it’s the only serious bidder left and (I suspect) would pay less than AT&T’s winning bid last December.

This case raises yet another objection to the proposed merger. Most of the objections have focused on the duoopoly of carriers that reduce choice for cellular subscribers. Here we have one (of many) example for the oligopsony side: what impact would having only two large scale buyers for phones, infrastructure, spectrum, on-deck applications and other key mobile technologies.