Verizon, T-Mobile stop bickering, enter spectrum pact

All’s fair in love and war. It was only yesterday that T-Mobile was lobbying hard to halt Verizon’s acquisition of the cable operators’ unused 4G spectrum. Today it’s not opposed to the deal at all. What changed? T-Mobile and Verizon(s vz)(s vod) on Monday revealed an agreement to swap some of those same 4G airwaves if Verizon’s $3.9 billion purchase gets regulatory approval.

The new deal will see licenses in 218 markets change hands, the balance going to T-Mobile, which will pay Verizon an undisclosed sum of cash. In all, T-Mobile will gain licenses covering 60 million people, and, most importantly, T-Mo will be able to fill critical gaps in its future LTE network. Though T-Mobile gained a lot of Advanced Wireless Services (AWS) airwaves after its merger with AT&T(s t) failed, it still has the frequency holdings to only partially cover the country. For instance its original plans called for covering only three-quarters of the top 25 markets with the new LTE network.

The deal with Verizon can fill in those holes, giving it spectrum in Philadelphia; Washington, D.C.; Detroit; Minneapolis; Seattle; Cleveland; Columbus, Ohio; Milwaukee; Charlotte, N.C.; Raleigh-Durham, N.C.; Greensboro, N.C.; Memphis, Tenn.; and Rochester, N.Y., among other markets. In exchange, Verizon would receive licenses covering 22 million people.

It’s no coincidence that most of the licenses T-Mobile gains are east of the Mississippi. Verizon already has AWS holdings in the eastern half of the U.S., and the cable deal will only make it more flush in east coast airwaves. Meanwhile, T-Mobile’s received a lot of west coast airwaves from AT&T.

So why the change of heart from T-Mobile? It’s probably acknowledging reality. T-Mobile has been angling for those cable airwaves all along, which is why it has called for the Verizon-cable deal’s dissolution on anti-competitive grounds. But it likely realizes it has little chance of stopping the deal from going forward, so T-Mobile might as well deal directly with the airwaves’ eventual owner. You also could take the more cynical view that Verizon is simply buying a very vocal critic’s silence with some extraneous spectrum.

Image courtesy of Flickr user buddawiggi.