Watchdogs Ask FCC To Scuttle Verizon's Spectrum Deal

by Wendy Davis, Feb 22, 2012, 5:29 PM

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Verizon's planned alliance with three cable companies will undermine competition and harm consumers, advocacy groups argue in petitions filed with the Federal Communications Commission.

Public Knowledge, New American Foundation Open Technology Initiative and Writers Guild of America, West, and other groups are asking the FCC to block the companies from following through with their plans.

The deal, announced in December and awaiting regulatory approval, calls for Verizon to pay $3.6 billion to license spectrum from Comcast, Time Warner and BrightHouse Networks. The agreement also provides for Verizon and the cable companies to market each other's services.

Verizon and Comcast are already co-marketing their services in Seattle, Portland and the San Francisco area. They are offering a quadruple-play deal that allows consumers who sign up for Comcast's Xfinity TV bundle and Verizon's mobile phone service to receive a $300 prepaid Visa debit card.

Critics argue that the arrangement will prove anti-competitive, especially given that Verizon recently stopped expanding its high-speed FiOS network.

"To 'supersize' Verizon Wireless with additional spectrum from Comcast, Time Warner Cable, BrightHouse, and Cox so that the largest wireless operator can better promote the services of the largest incumbent cable operators directly undermines the pro-competitive policies of the 1996 Act and is thus contrary to the public interest," Public Knowledge and other watchdogs argue in a joint petition. "Even charitably interpreted, the joint agreements provide a mechanism for future collusion on pricing, building out, coverage, and other market control methods."

The advocacy groups also warn that Verizon and the cable companies "would have an incentive to develop handset technology that can easily hand off calls between their respective networks, but not between others."

They add that the companies would "have the means and motivation to develop proprietary standards for the delivery of video over broadband, inhibiting the development of independent online video providers and putting their competitors at a disadvantage."

The advocacy group Free Press argued in a separate petition that the deal will result in Verizon controlling more than 33% of all mobile broadband spectrum and will give Verizon and AT&T a combined 60% share. "Not only will these transactions doom the wireless market to permanent duopoly status, but their associated joint cartelization agreements will further tilt the wireline market towards a cable monopoly, forever ending any hope of wireless-wireline or cable-telco competition."

T-Mobile also weighed in against the deal. "Allowing Verizon Wireless to continue to aggregate spectrum unchecked would necessarily preclude access to this spectrum by smaller competitors that will use it more quickly, intensively, and efficiently than Verizon Wireless," T-Mobile argues. "The acquisition effectively will limit the bandwidth available for the deployment of LTE by competitors of Verizon Wireless."

 

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