The chairman of the Senate Judiciary Antitrust Subcommittee is questioning Verizon's move to stop offering stand-alone wired Internet service, asking whether it's connected to a joint-marketing and spectrum agreement with a group of cable firms.
"My concern centers on the potential harm to both competition and consumers that could result and whether there is a connection between the discontinuance of retail stand-alone DSL and Verizon's planned purchase of Advanced Wireless Systems spectrum licenses from a number of cable companies," Sen. Herb Kohl, D-Wis., said in a letter Thursday to Verizon General Counsel Randal Milch.
Kohl's subcommittee has been examining Verizon Wireless's bid to buy spectrum from a group of cable companies, including Comcast and Time Warner Cable, and enter into marketing agreements that will require the firms to sell each other's services. Kohl's panel held a hearing on the deal in March.
Verizon indicated a few weeks ago that it would stop selling stand-along wired Internet service to its residential customers on May 6 and instead require them to purchase the service as part of a bundle. The company maintains the move will allow it to better control costs and meet its customers' needs.
Verizon did not disclose its plans to stop offering stand-alone Internet DSL service at the subcommittee's hearing, Kohl said. He noted concerns raised at the hearing about the trend toward offering "bundled" services and whether they limit choice and increase prices.
The DSL announcement "appears to contradict your testimony that 'no one is constrained to buy [a service] in these bundles,'" Kohl said. "It appears inconsistent for Verizon to argue on the one hand that the joint marketing arrangements and bundling wireless services with cable offerings increases customers choice, while on the other hand the company is tying voice and DSL services, compelling consumers to purchase bundled offerings."
Kohl gave Verizon three weeks to answer a long list of questions related to its decision to drop stand-alone DSL service. A Verizon spokesman said the company is reviewing the letter and will answer Kohl's questions.
Kohl's letter comes a few days after the Federal Communications Commission, which must approve Verizon's bid to buy the cable firms' spectrum, requested additional details from Verizon about its pledge to sell two spectrum licenses it is not currently using if the spectrum deal with the cable firms goes through. The FCC questioned whether Verizon would sell the two spectrum licenses even if the commission does not let it buy all of the spectrum it wants from the cable firms.
When asked about the FCC letter during a conference call Thursday on an unrelated issue, Comcast Executive Vice President David Cohen said he is confident that regulators will approve the spectrum sale and marketing agreements with Verizon.