The Federal Communications Commission could be throwing a wrench in Verizon Communications’ strategy for offering super-fast upcoming 5G wireless service in the next few years.
The strategy depends in part on Verizon $1.8 billion deal to acquire XO Communications’ national fiber optic network and lease rights to XO’s high frequency airwave rights. But this week, the FCC said it was pausing its usual 180-day review period for evaluating the deal with XO, owned by billionaire investor Carl Icahn, after many of Verizon’s competitors complained.
The FCC often pauses its 180-day review period on major deals, sometimes more than once. In Verizon’s case, however, the agency said in a letter dated July 20 that it hadn’t gotten information and responses it requested that were due July 7. “As of the date of this letter, neither Applicant has completed their production of responsive material,” the agency wrote. “Further, with respect to certain information requests no anticipated production date has been offered.”
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Verizon (VZ) said it planned to supply all of the information that the agency had requested. “Verizon and XO Communications have already provided substantial data to the FCC and we’ll continue to work together with them and other regulatory agencies to provide all requested information,” a spokesman said. “We’re confident the approval process will continue to proceed in a timely manner.”
Verizon needs XO’s 26,000 miles of fiber optic cables and 102 spectrum licenses to help pass huge amounts of data back and forth between its 5G wireless stations and wired networks. XO’s national network runs at 10 gigabit per second speeds and stretches from Seattle to Miami and New York to Los Angeles. XO’s airwave rights, which Verizon has an option to buy in 2018, run in the 28 gigahertz and 39 gigahertz ranges that will be used for 5G.
But Verizon competitors, including Windstream Services, Transbeam and Dish Networks, have argued that the deal will quash competition for fiber optic network operators and wireless carriers that need to connect to wired networks and the Internet. “XO Communications serves as a significant, independent alternative path into at least some of Verizon’s U.S. network,” Dish argued in a filing with the FCC last month.
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When the FCC pauses a 180-day review, it doesn’t always signal that a deal is in trouble. In March last year, the FCC delayed its review of Comcast’s offer to buy Time Warner Cable, which was ultimately blocked, and AT&T’s bid for DirecTV, which was approved, because of a pending court ruling challenging a specific procedure the agency was using in both cases. In January, the FCC briefly paused its review of Charter’s acquisition of Time Warner Cable and Bright House Networks because of a large volume of documents the companies delivered at one time.