Consumer advocates say that this pretty much ends prospects that cable and phone companies will vigorously compete in wired and wireless broadband. But government officials believe they extracted enough compromises from the companies to resolve antitrust concerns and protect the public interest. The Justice Department filed a consent decree to let Verizon pay close to $4B to a consortium of cable companies led by Comcast for some airwave spectrum they control, as the erstwhile competitors also strike a series of agreements to develop products and cross-market each other’s services. The FCC also is teed up to endorse the deal; Chairman Julius Genachowski said he will circulate an order based on the consent decree to be approved by the full commission.
The agencies were won over after Verizon agreed to speed up the timetable for it to provide services on the wireless spectrum it’s acquiring from the cable companies, and to offer data roaming on its networks to competitors for five years. In addition, Verizon said it won’t sell cable services in markets where it also offers FiOS services. The companies also scrapped language in the deal that would have barred Verizon from selling FiOS in some areas. Previously Verizon had said that, if the deal is approved, it would sell some of its spectrum to T-Mobile. The companies also agreed to submit their marketing deals for government approval every four years. These and other concessions mean that “robust competition between Verizon and the cable companies continues now and in the future as technological change alters the telecommunications landscape,” says Justice’s antitrust acting Assistant Attorney General Joseph Wayland.
But consumer groups say the agencies didn’t go far enough. “It is not enough for the anti-competitive cross-selling agreement to be limited in time or scope–it should not happen at all,” says Public Knowledge CEO Gigi Sohn. “Policymakers can no longer pretend that the broadband market is competitive. Congress and the FCC should pursue new policies to stimulate competition in wireline internet access service–or resign themselves to regulating a broadband monopoly.” And Free Press Policy Adviser Joel Kelsey says that the modified agreement fails to “deal with the deep structural problems in the market for at-home broadband service. There is still no meaningful competition — and that will mean higher prices for everyone.”
Here are the official statements from FCC Chairman Julius Genachowski, followed by Comcast and Verizon:
“A rigorous review by the Federal Communications Commission and Department of Justice staffs revealed that the deal as proposed by Verizon Wireless and the cable company owners of SpectrumCo posed serious concerns, including in the wired and wireless broadband and video marketplaces. In response to the agencies’ objections, the parties have made a number of binding pro-competitive commitments and will also make fundamental changes to their agreements. Because of these substantial undertakings and in light of the Consent Decree the companies executed with the Justice Department today, I believe the Commission should now approve this transaction, and I will be circulating a draft order to my colleagues that would do so.
“Specifically, Verizon Wireless has undertaken an unprecedented divestiture of spectrum to one of its competitors, T-Mobile, and has committed to accelerate the build-out of its new spectrum and enhance its roaming obligations. In addition, the companies’ commercial agreements will be modified to, among other things, preserve Verizon’s incentives to build out FiOS, increase wireless competition, and ensure that the proposed IP venture is pro-consumer and that its products cannot be used in anti-competitive ways.
“Approval of the substantially modified transaction will promote the public interest and benefit consumers in several ways. By advancing U.S. leadership in 4G LTE deployment, the transaction marks another step in our effort to promote the U.S. innovation economy and make state-of-the-art broadband available to more people in more places. The transaction will preserve incentives for deployment and spur innovation while guarding against anti-competitive conduct. And vitally, it will put approximately 20 megahertz of prime spectrum—spectrum that has gone unused for too long—quickly to work across the country, benefiting consumers and the marketplace.
“I look forward to working with my colleagues toward a final Commission vote in the near future.”
This is from Comcast EVP David Cohen:
“We appreciate the timely completion of the antitrust review by the government of the proposed sale of spectrum and associated commercial agreements between Verizon Wireless, Comcast, and the other cable companies. And, we are pleased that the consent decree that we have negotiated with the Department of Justice preserves the most important goals of the agreements, including Comcast’s ability to market Verizon Wireless services throughout our footprint in order to offer our customers a wireless option, Verizon Wireless’ ability to market our products in virtually all of our footprint, our ability to opt into an MVNO relationship with Verizon Wireless, and the essential structure of the innovation R&D technology joint venture. We are also pleased that the FCC is circulating an order proposing approval of the spectrum sale and we are hopeful that a final order will be issued shortly.”
And this is from Verizon Wireless General Counsel William Petersen:
“As evidenced by the consent decree, we believe we have addressed the Department of Justice’s concerns. We now believe the consumer benefits of the transaction will be promptly realized, and look forward to the conclusion of the FCC review so that we can move forward with meeting the unprecedented consumer demand for innovative 4G LTE mobile and data driven products and services.”