In a development that may help Verizon fulfill its goal to become the first national U.S. wireless carrier to deploy fifth generation (5G) wireless services, the Wireless Telecommunications Bureau (WTB) of the FCC consented to Verizon’s request to enter into a spectrum lease agreement with Nextlink Wireless, LLC, a unit of XO Communications.  The arrangement will give Verizon access to FCC licenses held by Nextlink in market areas that cover 63% of the U.S. population. 

The spectrum lease deal, which was approved by the FCC on Monday, is related to Verizon’s proposal to acquire the fiber optic network business of XO Communications as part of a $1.8 billion deal announced last February.  FCC officials are reviewing that deal separately, and the WTB informed the parties last week that it has paused the agency’s informal 180-day “shot clock” for approval of license assignments or transfers pending receipt of additional requested data from Verizon.  Specifically, the Nextlink spectrum assets associated with the Verizon lease deal include 93 local multipoint distribution service (LMDS) licenses in the 28 GHz band and nine licenses in the 39 GHz band that cover all or parts of 289 cellular market areas nationwide.  While the lease deal gives Verizon the de facto right to operate the spectrum assets in question, the underlying FCC licenses will remain under the de jure control of Nextlink.  Verizon has also told the FCC that it expects to terminate the lease arrangement by the end of 2018. 

Rejecting a petition filed last May by Incompas (formerly Comptel), which claimed that both the lease deal and Verizon’s proposed acquisition of the XO fiber network “pose serious threats to competition and consumer welfare,” the WTB determined that “Verizon’s post-transaction spectrum holdings across the LMDS . . . and 39 GHz bands do not raise any particular competitive concerns in light of the current state of the marketplace.”  While finding that “the likelihood of any public interest harms at this point in time is low,” the WTB agreed that “some public interest benefits are likely to be realized” from the lease arrangement, “such as the expeditious use of this spectrum for the potential introduction of innovative 5G services.”  As such, the WTB concluded that the de facto transfer spectrum lease arrangement between Nextlink and Verizon “would serve the public interest, convenience and necessity.”  Voicing appreciation for “the FCC’s prompt consideration,” Verizon senior vice president Will Johnson declared that FCC approval of the Nextlink lease deal “will help us stay on track to become the first company to commercially deploy 5G in 2017.”