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NJ Daily / TECHNOLOGY

Lawmakers Question Verizon-Cable Deals

photo of Juliana Gruenwald
March 21, 2012

Democrats on a key Senate panel pressed Verizon and Comcast officials Wednesday on whether the spectrum sale and marketing deal they want to enter into will discourage them from actively competing against each other in the future.

“It’s almost as if your companies got into a room with other big cable companies and agreed to throw in the towel and stop competing, [which] means consumers could see cable rates rise. How can we be sure that won’t happen?” asked Sen. Al Franken, D-Minn., during a hearing on the deal before the Judiciary Antitrust Subcommittee.

In December, Verizon Wireless, the nation’s top wireless provider, announced it planned to buy spectrum from a Comcast, Time Warner Cable, and Bright House Networks joint venture and in a separate deal with Cox Communications. In addition, Verizon Wireless and the four cable companies also agreed to enter into related cross-marketing arrangements to sell each other’s services. The Federal Communications Commission is currently weighing the proposed spectrum sales, while the Justice Department is examining whether the marketing agreements conflict with antitrust laws.

 

Congress has no direct say in the deals but can influence the process. Calls last year by Senate Judiciary Antitrust Chairman Herb Kohl, D-Wis., and other lawmakers for regulators to block AT&T’s bid to buy rival T-Mobile USA likely provided the FCC and Justice Department with some political cover in opposing that transaction.

Kohl said after Wednesday’s hearing that he would weigh the testimony before coming to a conclusion on the Verizon-cable agreements. Still, like Franken, he questioned whether Verizon—which offers FiOS, its own Internet, phone, and video service—and the four cable firms would “pull their punches” in response to their marketing agreements.

Both David Cohen, Comcast executive vice president, and Verizon’s Randal Milch, executive vice president and general counsel, said their firms would continue to compete vigorously against each other. They noted that while the marketing agreements would allow cable-company representatives to sell their services in Verizon Wireless stores, there is nothing to stop those stores from also offering Verizon’s FiOS service.

They also argued the deals would benefit consumers by allowing for more-effective use of spectrum, which the cable firms are not currently using, and provide their customers with access to new services. “The commercial agreements at issue here are ordinary and customary market-standard agreements,” Cohen said. “There is no merger here like there was in the AT&T/T-Mobile [transaction]. There is no acquisition of customers or of ongoing business operations. Not one competitor will be removed from the marketplace.”

Critics say allowing the nation’s top wireless provider to obtain even more spectrum will harm competitors by keeping desperately needed airwaves out of the hands of smaller rivals.

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