Verizon Wireless and T-Mobile USA have struck a deal on wireless mobile broadband spectrum--but there's a catch. The other spectrum deals Verizon has on the table with Leap Wireless and three U.S. cablecos have to be approved.

Wireless carriers are looking for a solution to the spectrum crunch--demand for mobile broadband, driven primarily by video traffic, is outstripping networks' capacity. According to the Cisco Visual Networking Index, global mobile data traffic will increase 18-fold between 2011 and 2016, making for a CAGR of 78% and reaching 10.8 exabytes per month by 2016. Mobile video traffic exceeded 50% of al mobile data for the first time in 2011, and two-thirds of the world's mobile data traffic will be video by 2016. Mobile video will increase 25-fold between 2011 and 2016, accounting for more than 70% of total mobile data traffic by the end of the forecast period.

Unlike non-real-time data services like e-mail or Webpage loading, the end user's video experience is in particular adversely affected by poor network performance. And that means that carriers comeptitively cannot afford to look the other way. Spectrum reuse, femtocells and offload strategies are part of the solution for carriers, but so is securing more spectrum through aftermarket deals like these or via new government auctions. Unused broadcast spectrum is another favourite target for wireless carriers-- something that has drawn hot criticism from the National Association of Broadcasters.

Unfortunately for Verizon, regulators are considering the spectrum sales and swaps on the aftermarket front in the light of collusion and antitrust. Verizon is looking to spend $4 billion for spectrum from SpectrumCo, a consortium of its arch-rival Comcast, Bright House Networks and Time Warner Cable, and cellphone rival Leap Wireless. Regulators and public-interest groups have said it makes for a little too much love among competitors.

T-Mobile also said that the deal would make for "excessive concentration" of spectrum for the No. 1 wireless carrier in the U.S., giving it an unfair market position vis a vis smaller rivals like T-Mobile, which is relatively spectrum-starved but trying to expand 4G LTE nationally to better compete with the Big 3: Verizon, AT&T and Sprint. By striking a deal with T-Mobile, Verizon is trying to show regulators that it is willing to concede where it makes sense in order to bolster competition and choice for consumers.

Sanford Bernstein analysts Robin Bienenstock and Craig Moffett estimated that Verizon is selling the spectrum for $260 million, but the actual sale price was not disclosed.