FCC to Approve Sprint-Clearwire Merger, Spectrum Intact - The UpStream

FCC to Approve Sprint-Clearwire Merger, Spectrum Intact

posted Saturday Jun 29, 2013 by Scott Ertz

FCC to Approve Sprint-Clearwire Merger, Spectrum Intact

Things are starting to look a little less positive for DISH Network's bid for Clearwire, as the FCC is set to approve the Sprint-Clearwire deal. Not only will Sprint be allowed to purchase the remaining portion of the ailing wireless network that it currently owns about half of, but most surprisingly, the FCC is rumored to announce that Sprint will be able to retain all of Clearwire's spectrum.

Often when one large carrier purchases another entirely, spectrum must be left behind in certain markets because of overall market penetration. For example, when Verizon Wireless purchased Alltel a few years ago, spectrum in certain key markets was forced to be sold off to prevent Verizon from owning too much of the market. Often times, with the transfer of spectrum is the transfer of customers as well.

In this case, while the transfer of customers would be annoying, the transfer of spectrum would be the deciding factor on whether or not the deal is worth it for Sprint to complete. Sprint's business reasons for purchasing Clearwire is certainly not for the customer base, of which there is very little. Instead, it is the ability for Sprint to continue operating its WiMax network for the remaining time they have promised, plus use Clearwire's existing spectrum to enhance its own growing LTE network. The requirement to transfer spectrum to another carrier could make the deal less than worthless to the third largest national carrier.

All-in-all, this is good news for Sprint, and less than good news for DISH Network, who has put in a competing bid for Clearwire. Both bids are way above the company's theoretic value, but way below the cost and effort for either company to build out their own wireless networks, of which DISH Network has none. This is not a total loss for DISH Network, however, as they have also put in a bid for Sprint itself.

While the decision is far from official, the draft is reportedly distributed to FCC Commissioners right now. We expect to see the decision finalized in the coming weeks.

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