Verizon Wireless Inks First Sale in Lower 700 MHz Auction

Verizon Wireless today announced the first signed contract for the sale of spectrum in the company’s lower 700 MHz spectrum auction– and the buyer isn’t AT&T. Instead it’s Nortex Communications, an independent telco based in Texas.

According to its website, Nortex already offers a fixed wireless broadband offering using LTE, so purchasing the B-block spectrum from Verizon would appear to be an excellent fit. Nortex, subject to regulatory approvals, is acquiring a single lower B-block license in a four-county area northwest of Dallas.

Verizon Wireless agreed to sell some of its unused spectrum holdings in the lower 700 MHz A- and B-block if it was allowed to purchase spectrum from several of the nation’s largest cable companies. That deal was approved and since then Verizon has been deliberating with other carriers about its A- and B-block licenses.

AT&T has been looking for spectrum wherever it can find it ever since its plan to merge with T-Mobile failed to pass regulatory scrutiny, and many industry observers believe the company is a bidder for other Verizon A- and B-block licenses. There is a key challenge for anyone purchasing that spectrum, however, and that’s a lack of mobile handsets for use in those spectrum bands.

The 700 MHz band has been sub-divided into several smaller bands, with AT&T holding most of the spectrum in one of the sub-bands and Verizon holding most of the spectrum in another. Much of the A- and B-block spectrum is in a third block, where the spectrum is held by smaller wireless carriers who have considerably fewer customers than AT&T or Verizon. As a result, the smaller carriers have had difficulty persuading manufacturers to build mobile devices that will operate in the A- or B-blocks. As a provider of fixed rather than mobile broadband service, Nortex may not be expecting that situation to change.

If, however, AT&T were to acquire some of the A- and B-block spectrum, there is a possibility that the carrier could help drive the volumes required to interest mobile device manufacturers to provide products in those spectrum bands.

AT&T certainly isn’t out of the running yet, nor are other wireless carriers. In a blog post today, a Verizon Wireless spokesperson noted that the company is currently evaluating bids for other lower 700 MHz licenses.

The spokesperson also noted that Verizon Wireless has previously sold 24 of its lower 700 MHz licenses to seven different telecommunications companies operating in 13 states. But Nortex is the first carrier to sign a purchase agreement involving one of the licenses put up for auction as a result of the approval of the cable deal.