Verizon's deal with three cable companies will turn competitors into partners, which could hurt consumers, according to U.S. Sen. Al Franken. The FCC has agreed to hold a hearing.
The Federal Communications Commission (FCC) has once again
been asked to protect the rights of smartphone-toting consumers from
big-business spectrum deals. Following AT&T's nine-month process of trying
to convince the FCC that allowing it to purchase T-Mobile would benefit
Americans, it's now a Verizon Wireless deal that is the catalyst.
Verizon announced in early December that it had struck a
deal with Comcast, Time Warner Cable and Bright House Networks. The cable
companies plan to sell Verizon some of their spectrum for $3.6 billion. In
return, Verizon will sell cable products, and bundles of cable and Verizon
products will be offered together.
Comcast CEO Neil Smit, in a Dec. 2
blog
post, explained that by the terms of the deal, in four years' time,
Comcast, acting as a mobile virtual network operator (MVNO), will be allowed to
resell Verizon's service at wholesale rates and market and sell it as its own.
He added that Time Warner and Bright House were working on similar deals, which
would ultimately create "more choices for consumers."
The Times'
Bits blog reported
Feb. 2 that U.S. Sen Al Franken (D-Minn.), finding the deals to "reek of
collusion," sent
a Jan. 31 letter
to FCC Chairman Julius Genachowski, expressing his concern and urging the
FCC to "closely examine all of the terms and conditions of these
deals."
Franken explained that the deals include marketing
agreements, in which each will promote the others' products and services.
"These joint-marketing agreements will
turn these rival companies into partners, rather than competitors," wrote
Franken. "I fear this will ultimately mean less competition, less choice,
and higher prices for consumers."
Franken added that he urged Senator Herb
Kohl (D-Wis.) to hold a hearing, "so that we can further analyze the
competitive impacts of these deals." According to the Bits blog, on Feb. 1
Kohl agreed to a subcommittee hearing on the matter, though has yet to set a date
or release a witness list.
One expects that those who believed,
regarding AT&T's proposed purchase of T-Mobile, that the FCC was treading
where it didn't belong, or else doing so in a willy-nilly manner, will continue
to feel such sentiments.
AT&T CEO Randall Stephenson, during
the carrier's fourth-quarter 2011 results earnings call,
described
the FCC as "intent on picking winners and losers rather than letting these
markets work."
Stephenson described an industry pinched for spectrum and so
struggling to support "explosive mobile broadband growth."
He continued:
This FCC has made it
abundantly clear that they'll not allow significant [mergers and acquisitions]
to help bridge their delays in freeing up new spectrum. So in the absence of
auctions, our company and others in the industry have taken the logical step of
entering into smaller transactions to acquire the spectrum we need to meet this
demand. But even here, we need the FCC's action and leadership, and
unfortunately, even the smallest and most routine spectrum deals are receiving
intense scrutiny from this FCC, oftentimes taking up to a year and sometimes
longer before these are approved.
Verizon and its new friends will no doubt be hoping their
deal will move along more expediently.
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