Dish Cries Foul, Urges FCC to Block Verizon’s XO Deal

Dish Network is seeking to block Verizon’s recently announced deal with XO Communications on the grounds the transaction would give the wireless carrier near-exclusive control of critical 5G spectrum.

In a 32-page petition sent to the FCC Tuesday, Dish asked the commission to deny approval for both Verizon’s proposed acquisition of XO’s fiber-optic networking business as well as the carrier’s spectrum lease deal with XO subsidiary Nextlink Wireless. The latter deal would allow Verizon to lease Nextlink’s 28 GHz and 39 GHz LMDS spectrum with the option to buy at the end of 2018.

Dish argued the transactions would put Verizon – already a dominant U.S. carrier – in control of fiber network and spectrum resources that will a pivotal role in the deployment of next generation services and thereby hinder competition in the 5G marketplace. Dish also said the deals would squash current and potential competition between Verizon and XO in the fiber and wireless mobile backhaul, Internet transit, and enterprise and wholesale markets.

“Stated simply, if the lease arrangement goes forward, licensed millimeter wave (“mmWave”) spectrum in a critical frequency range will be controlled almost exclusively by Verizon,” Dish said.

Verizon has previously said the transactions would “benefit the public interest without any material adverse harm to customers or competition.” But the satellite company accused Verizon of attempting to downplay the “interrelated nature of the purchase and lease and their significant combined effects” in its application to the FCC.

“By structuring the spectrum component of the transaction as a de facto transfer lease instead of an acquisition, Verizon has avoided discussion of the total impact of its deal with XO Holdings,” Dish wrote. “But the spectrum licenses appear to be a key, if not the most important, component of Verizon’s deal with XO Holdings.”

“Control over XO’s and Nextlink’s assets will substantially enhance Verizon’s already dominant position by aggregating substantial amounts of wireline and wireless inputs important to a number of communications markets,” Dish said. “The competitive effects of the purchase of XO and the lease of spectrum from Nextlink are therefore intertwined, and the Commission should analyze the potential competitive harms of both applications together as a single transaction.”

Trade association INCOMPAS, which represents communications and technology companies, also asked the FCC to block the deals.

Like Dish, INCOMPAS said the deals would pose “serious threats to competition and consumer welfare.”

Competition issues aside, Verizon clearly knows the value of the Nextlink spectrum for 5G.

Last month the carrier filed a request with the FCC seeking permission to test 5G technologies on 28 GHz spectrum. Verizon has also encouraged the FCC to make super high frequency spectrum available to mobile operators for the deployment of 5G services.

In comments filed in January, Verizon specifically asked the commission to allow 28GHz and 39 GHz licensees to use their licenses for mobile services. The carrier also urged the FCC to auction spectrum in those bands that is not already licensed and unify the 37 GHz and 39 GHz bands into a single 3 GHz swath of continuous spectrum. Verizon said those steps would “unleash” millimeter wave spectrum and “help usher in 5G services for U.S. consumers.”

Comments and petitions on the Verizon deals are due by May 12; replies must be filed by May 27.

Verizon previously said it expects to close the XO transaction in the first half of 2017.