In an effort to head off regulatory rejection of its planned $3.6 billion acquisition of more wireless spectrum from an outfit called SpectrumCo LLC, Verizon Wireless, a joint venture of Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD) has struck a deal with T-Mobile USA to shuffle the spectrum deck a little. T-Mobile is owned by Deutsche Telekom AG (OTC: DTEGY).

The deal is part cash and part spectrum swap that includes some of the spectrum included in Verizon’s deal with SpectrumCo. Financial details have not been revealed, but here’s what Verizon had to say about it:

The agreement includes a number of intra-market spectrum swaps that will result in better use of [spectrum] for both companies. The agreement also includes exchanges of spectrum between the companies in numerous markets which result in an overall net transfer of spectrum from Verizon Wireless to T-Mobile and a cash payment from T-Mobile to Verizon Wireless. Financial terms of the agreement are not being disclosed. The license transfers require FCC approval which is expected later this summer.

No word yet from AT&T Inc. (NYSE: T), Leap Wireless International Inc. (NASDAQ: LEAP), or MetroPCS Communications Inc. (NYSE: PCS) on their reaction, but Leap and MetroPCS are not likely to support it. AT&T will probably keep mum, considering that it too will need or want to acquire more spectrum in the future.

The Verizon/T-Mobile deal will silence one of the more vocal critics of Verizon’s acquisition of SpectrumCo. T-Mobile has opposed the acquisition on the grounds that Verizon wasn’t using all the spectrum it already owned so allowing the company to hoard more was essentially anti-competitive when companies like T-Mobile actually needed more spectrum in order to build out high-speed LTE networks.

T-Mobile along with Sprint Nextel Corp. (NYSE: S) had joined a group called ‘Alliance for Broadband Competition’ to oppose the Verizon-SpectrumCo deal. T-Mobile is not likely to contribute much either in the way of funds or moral support to the group any longer.

Verizon has effectively shut T-Mobile up. The issue now is whether or not the other wireless carriers will also shut up. The Federal Communications Commission still has to rule on the Verizon-SpectrumCo deal. Verizon is taking a net spectrum loss on today’s announced deal with T-Mobile and the company surely hopes that will sway the FCC vote. The devil is surely in the details.

Paul Ausick

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