• by Wendy Davis  @wendyndavis, July 10, 2012

Verizon's controversial plan to purchase spectrum from cable companies appears likely to win approval from the Federal Communications Commission, Reuters reports.

But the Justice Department also must sign off on the deal before it can go through, and that agency reportedly has concerns about whether the deal will harm consumers. Even if regulators approve the deal, they can impose conditions to limit its potential anti-competitive effects.

The Verizon-cable agreement, first announced in December, calls for Verizon to pay $3.9 billion to license spectrum from Comcast, Cox, Time Warner and BrightHouse Networks. The deal 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. The companies 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 debit card.

Consumer groups and other critics argue that Verizon's spectrum deal will prove anti-competitive, especially given that Verizon recently stopped expanding its high-speed FiOS network. Advocacy group Free Press said in February that the deal argued will result in Verizon controlling more than 33% of all mobile broadband spectrum.

Wireless competitor T-Mobile initially opposed the deal, but recently reached an agreement with Verizon. That deal -- which calls for Verizon to license a portion of the spectrum it will acquire from the cable companies to T-Mobile -- will boost the smaller company's 4G and upcoming LTE networks. But Verizon will only license spectrum to T-Mobile if the $3.9 billion deal with the cable companies goes through.

Consumer advocates generally say T-Mobile's acquisition of spectrum would be a plus, but object to the larger deal between Verizon and the cable companies. "To the extent that it's being used to sanitize the spectrum deal, it's a big problem," Free Press policy adviser Joel Kelsey says of the Verizon/T-Mobile deal.

Free Press research director S. Derek Turner stated that the Verizon/T-Mobile arrangement "fails to alleviate the overall harms to competition that the marriage of big cable and big telco would create."

The FCC hasn't officially said it intends to approve the spectrum transfers, but late last week it denied a request by consumer groups to extend the deadline for comments on Verizon's plans to license spectrum to T-Mobile.

Meanwhile, 32 House Democrats said this week in a letter to the FCC and DOJ that the Verizon-cable deal "raises serious concerns for competition and consumers."

The lawmakers warn that the joint marketing agreements between Verizon and the cable companies "appear to limit the availability of competitive services in video, broadband, voice, and wireless markets."