DOJ Approves Alliance Between Verizon, Cable Companies

by Wendy Davis, Aug 16, 2012, 6:01 PM

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The Department of Justice said on Thursday that it has approved a controversial marketing alliance between Verizon and four cable companies. Regulators from the Federal Communications Commission are expected to soon sign off on the deal as well.

The deal allows Verizon to purchase $3.6 billion worth of spectrum from the cable companies -- Comcast, Cox, Time Warner and BrightHouse Networks -- and also to co-market services with them. Consumer advocates and other opponents to the plan warned that it could harm consumers, especially if Verizon stops competing with cable companies to offer faster or cheaper broadband service. That concern was fueled by Verizon's recent decision to stop building out its FiOS network -- once considered a serious rival to cable modem service.

While the DOJ approved the deal, officials also required the companies to agree to a host of limits aimed at preserving competition. Among the most significant is that Verizon won't be able to sell any cable company products in areas where it has already deployed FiOS. Verizon will only be allowed to sell cable services in areas without FiOS until 2016. At that point, officials will review the deal.

Critics say those conditions are better than nothing, but don't go far enough to ensure competition. "Policymakers deserve credit for trying to make the best of a bad deal," Public Knowledge CEO Gigi Sohn said in a statement. "However, it is not enough for the anti-competitive cross-selling agreement to be limited in time or scope -- it should not happen at all."

Sen. Al Franken (D-Minn.) questioned whether the DOJ's restrictions will insure competition. "Without meaningful competition for broadband, the cable companies will be able to charge whatever they want -- and drive consumers to purchase expensive bundles of services they don’t want or need in order to get Internet service," he said in a statement.

FCC Chairman Julius Genachowski said on Thursday that he expects to soon circulate a draft order for approval by the entire commission. He said in a statement that the "serious concerns" posed by the deal were alleviated by conditions agreed to "pro-competitive commitments" -- including a promise by Verizon to sell spectrum to wireless rival T-Mobile.

 

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