FCC Drills Deeper Into Verizon-Cable Deal

The Federal Communications Commission appears interested in taking a closer look at Verizon's proposed alliance with cable companies.

Today, the agency asked Verizon and cable companies for a host of data relating to the deals, which call for Verizon to pay almost $4 billion to license spectrum from Comcast, Cox, Time Warner and  BrightHouse Networks. Verizon and the cable providers also intend to enter into joint marketing agreements.

Advocacy group Public Knowledge, which opposes the alliance, cheered news of the FCC's requests.

"We are very pleased that the Commission is following an aggressive course in asking for more information for a deal that could create a new communications cartel in this country," Gigi Sohn, president and CEO of the group, said in a statement. "Verizon should be required to show whether it is going to have spectrum shortages. Comcast should be required to provide plans to prove it actually considered entering the wireless business. All of the companies should provide full documents to show the extent of the joint marketing arrangements.

Public Knowledge and other advocacy groups have been wary of Verizon's spectrum deal with the cable companies from the get-go. The watchdogs say the deal can harm consumers -- especially if Verizon and cable companies no longer have any incentive to compete with each other to offer faster, cheaper broadband service. That concern has been exacerbated by Verizon's recent decision to stop expanding its 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, New American Foundation Open Technology Initiative and Writers Guild of America, West, and other groups recently argued in a petition asking the Federal Communications Commission to nix the deal.

Last Friday, Verizon and the cable networks filed papers contending that the FCC shouldn't review the co-marketing provisions of the deal. The companies said that the marketing components were separate from the licensing arrangements. "Consideration of the commercial agreements is not necessary for -- or even relevant to -- the review of the spectrum license assignments here," the companies argue. "The license assignments and commercial agreements are separate from, and not contingent on, each other."

Opponents rightly countered that the spectrum transfer is so interwoven with the marketing provisions that the FCC should scrutinize the deal in its entirety. Hopefully the agency will do just that.

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