Last year Verizon completed a mammoth deal with the cable industry that involved Verizon buying $3.6 billion in spectrum, and included cable operators co-marketing Verizon LTE services. An unwritten wink-wink portion of the deal involved Verizon letting unwanted DSL customers flee to cable, a plan that creates all manner of competitive issues for millions of customers, since it strengthens the cable industry's monopoly over broadband further across a huge swath of the country.

How did Verizon get regulators to look the other way on this deal? They promised that they'd return a large chunk of their unwanted spectrum to the market. Most of those airwaves, acquired in 2008's AWS auction, exist in the 700 MHz Lower A and B Block spectrum, while Verizon's LTE network uses 700 MHz upper C spectrum. Initially Verizon stated they were in talks with more than 64 companies about the spectrum, though unsurprisingly Verizon announced that a large share of that spectrum will be going to AT&T.

In a blog post, Verizon states they'll be selling 39 lower 700 MHz B block licenses to AT&T for $2 billion, and the transfer of AT&T AWS (10 MHz) licenses in western markets including Los Angeles, Phoenix, Fresno, and Portland, Oregon. The deal helps AT&T shore up spectrum in underpowered markets, which should result in a boost for many LTE owners in troubled locations like Chicago and Miami.

While it's rather cozy that a huge chunk of spectrum went to AT&T as regulatory "punishment" for a troubling Verizon/cable deal, Verizon's quick to point out that of the companies they sold spectrum to, "five are small or regional telecom carriers and one is a minority-owned firm." AT&T has conducted more than forty different spectrum acquisition deals since their attempted takeover of T-Mobile was blocked by federal regulators. Just this week the company also announced they'd be acquiring Alltel for $780 million.