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Posted at 05:59 PM ET, 06/25/2012

FCC favorably views Verizon, T-Mobile deal

Verizon Wireless’ spectrum deal with T-Mobile is being viewed favorably by federal regulators, increasing Verizon’s chances of getting a separate deal with cable firms approved, according to people familiar with the thinking of government officials.

Verizon Wireless said Monday that it would swap wireless airwaves with T-Mobile, effectively allowing T-Mobile to significantly boost capacity on its high-speed Internet network, particularly in the Northeast United States.

T-Mobile will gain spectrum covering 60 million people in exchange for cash, and spectrum said it will hand over to Verizon Wireless spectrum that covers about 22 million people. Analysts put the value of the spectrum T-Mobile is buying from Verizon at about $260 million.

“This deal means that (T-Mobile) will have a better spectrum portfolio overall, and this may increase its ability to get access to key devices in particular in a market where upgrade fees are rising,” said Craig Moffett, an analyst at Sanford C. Bernstein.

Verizon Wireless’ announcement is tied to the wireless giant’s $3.6 billion bid to buy airwaves from cable giants Comcast, Cox, Time Warner and Bright House. That deal has drawn criticism for its potential to expand the lead of Verizon Wireless, already the nation’s biggest wireless carrier, over its competitors. A cross-marketing arrangement between Verizon Wireless and cable firms has also drawn antitrust scrutiny. Officials have expressed concern that Verizon Communications’ competing FiOs Internet and television service may be neglected, leaving consumers with fewer choices.

Over the past two weeks, Federal Communications Commission officials have met with Verizon Wireless officials, expressing concern that the company’s deal with cable companies would give Verizon too much dominance in the wireless market. The company’s spectrum holdings would be far richer than other wireless carriers and make it difficult for competitors such as T-Mobile to compete. T-Mobile had been a vocal critic of Verizon’s deal with cable firms.

Verizon appeared to be working aggressively to appease concerns raised by regulators, and a person familiar with the FCC’s thinking said the move was a significant milestone in the regulatory review.

“The announcement is significant and unprecedented,” said the person, who spoke on the condition of anonymity because the review is private.

The spectrum deal between Verizon and cable firms could be decided by Aug. 7 or shortly after, a soft deadline the FCC has set for the completion of its review, the person said.

Verizon’s marketing deal with cable firms continues to draw concern. The Justice Department is leading an investigation of that portion of the spectrum deal and may decide to only approve the spectrum purchase if the companies agree to scale back their marketing arrangement, people familiar with the reviews said.

By  |  05:59 PM ET, 06/25/2012

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