Verizon's bid to buy spectrum and enter into marketing agreements with a group of cable companies will get its first public examination before the Senate Judiciary Committee Wednesday afternoon.
The deal is not nearly as controversial as AT&T's failed effort last year to buy T-Mobile USA. Still some public interest groups and competitors such as T-Mobile are calling for the FCC and Justice Department to block the deal. Wednesday afternoon's hearing before the Judiciary Antitrust Subcommittee will provide some sense of whether lawmakers also have concerns.
Groups like Free Press and Consumers Union argue that Verizon's bid to buy spectrum from a joint venture among Comcast, Time Warner Cable and Bright House Networks and a separate deal with Cox Communications will further cement the hold that Verizon and AT&T, the nation's top two mobile operators, have over the U.S. wireless market. At the same time, critics say that related agreements by Verizon and the four cable companies to sell each others' services will decrease competition for telephone, video and Internet services to the home and provide the companies with little incentive to compete against each other in new markets.
"Though the transaction we are considering now does not appear on the surface to be as harmful as AT&T's most recent horizontal empire plans, Verizon's consolidation of valuable spectrum raises as many long-term competitive concerns," Free Press Policy Adviser Joel Kelsey said in his written testimony for Wednesday' s hearing. "These concerns alone would be enough to reject these applications, but when viewed along with the unprecedented Verizon-cable cartelization agreements, the federal agencies reviewing this deal have no choice but to tell Verizon no if they intend to protect competition."
Verizon argues that the 20 megahertz of spectrum that it is seeking to buy is not being used now and is needed to help the company meet its customers' growing demand for wireless technologies. "Verizon Wireless is not buying a competitor and is not buying any customers or facilities. We are only buying spectrum not currently in commercial use in order to put it to use serving customers, and no customer will see fewer choices or increased prices as a result of this transaction," Verizon executive vice president and general counsel Randal Milch said in his written testimony.
Milch added that the marketing agreements with the cable companies will allow Verizon to offer a package of services outside of the small number of areas where it provides FiOS phone, video and Internet service. He noted that 85 percent of the areas served by the four cable firms do not have access to Verizon's FiOS service.
Verizon and the cable firms appear to be going to great lengths to detail the ways in which their deal differs from the failed AT&T-T-Mobile deal.
"Unlike the AT&T-T-Mobile deal, this transaction involves no consolidation of customers, jobs, assets or operating businesses. It will take spectrum not currently being used and get it to a company that wants to quickly deploy it to consumers. Consumers will benefit from more choice, more competition, and more convenience," executive vice president David Cohen said in a blog post Tuesday previewing his testimony before the Senate committee.
While the marketing agreements are viewed as potentially more problematic, some analysts still say the deals are likely to get a green light from regulators. "Absent the appearance of 'smoking gun' documents, we remain skeptical the DOJ and/or FCC will move to block the deals outright, though we believe there's a greater chance some conditions will be imposed," investment research firm Stifel Nicolaus said in a research note Wednesday.
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