T-Mobile: The FCC would likely approve a transfer to T-Mobile. T-Mobile arguably has the worst spectrum position of the four nationwide providers, which would allay any spectrum aggregation concerns. T-Mobile would also argue that Clearwire’s spectrum is necessary to strengthen T-Mobile’s competitive position vis-à-vis the other nationwide carriers. The FCC would likely accept these arguments and approve a T-Mobile purchase.

Verizon: An application to transfer Clearwire spectrum to Verizon would leave the FCC caught between the Scylla and the Charybdis. First, the Scylla: This FCC has indicated its intent to use spectrum policy to balance competitive forces in the mobile market by denying Verizon (and AT&T) access to additional spectrum. For example, in approving Harbinger’s acquisition of SkyTerra’s L-band spectrum (see my post here), the FCC prohibited Verizon or AT&T from accessing SkyTerra’s spectrum without FCC approval. In the 14^th Mobile Wireless Competition Report (see my post here), the Commission continued to lay the groundwork for denying Verizon and AT&T access to additional spectrum, albeit this discussion was limited to spectrum below 1 GHz. Given the FCC’s inclination to deny Verizon and AT&T access to additional spectrum, it would appear the FCC would not be inclined to approve an acquisition of 2.5 GHz spectrum by Verizon.

The FCC’s Charybdis, however, is that denying Verizon’s acquisition of 2.5 GHz spectrum would also mean denying Clearwire access to the capital it needs to complete the construction of its competitive fourth-generation mobile network. An order denying a sale to Verizon would thus be required to find that the potential public interest benefit of funding the buildout of a fifth nationwide competitor (Clearwire) is outweighed by the potential competitive harm of allowing Verizon to acquire more spectrum. This is an untenable position, especially when the National Broadband Plan found that mobile carriers (including Verizon) need more spectrum anyway. In these circumstances, I expect the FCC would ignore its misgivings and approve the spectrum sale.

AT&T: The AT&T analysis is similar to the Verizon analysis, with one exception: When the FCC approved the AT&T-BellSouth transaction, AT&T-BellSouth “voluntarily” agreed to divest to an unaffiliated third-party all of the 2.5 GHz spectrum then held by BellSouth. Some believe that, because the FCC once accepted AT&T’s “voluntary” divestiture of 2.5 GHz spectrum, the FCC would not allow AT&T to buy it back. I disagree. First, the divestiture did not set any precedent because the divestiture was “voluntary” rather than part of an FCC order based on a finding of competitive harm. Second, the two situations are very different factually. When the AT&T-BellSouth merger was being considered, Clearwire and Sprint-Nextel lacked a nationwide footprint in the 2.5 GHz band, and they argued that the BellSouth divestiture was necessary for them to acquire such a footprint and become a more viable competitor. The Democratic Commissioners at the FCC agreed and considered the BellSouth divestiture necessary to promote competition. For the reasons noted above in the Verizon discussion, however, a Clearwire sale to AT&T to fund Clearwire’s network build would also likely be considered pro-competitive, which would be consistent with the reasoning underlying the “voluntary” AT&T-BellSouth divestiture. Like the Verizon scenario discussed above, I think the FCC ultimately would approve a sale of Clearwire spectrum to AT&T.

Sprint-Nextel: The FCC would almost certainly approve a sale of Clearwire spectrum to Sprint-Nextel. The FCC arguably already approved Sprint-Nextel’s control of Clearwire’s entire spectrum holdings in 2008, and I think it very unlikely the FCC would reach a different conclusion today.

Cable: A purchase by cable operators seems unlikely given cable’s reluctance to invest too heavily in mobile (i.e., other than Cox, cable hasn’t done anything with the AWS-1 spectrum it won at auction in 2006). But, if cable did purchase spectrum from Clearwire, the FCC would likely approve the sale, because cable would likely be considered a new entrant into the mobile market.

At the end of the day, I think it’s likely that Clearwire would be able to obtain regulatory approval of a sale of a portion of its spectrum regardless of who wins the private auction. The real question is: who is actually interested in the spectrum and how much are they willing to pay for it?