T-Mobile, Others Want Verizon's Cable Deal Killed

T-Mobile and nine public interest groups are asking the Federal Communications Commission to stop the proposed deal between Verizon Wireless and Cox Communications, as well as a second agreement between Verizon and SpectrumCo, a joint venture between cable companies Comcast, Time Warner Cable and Bright House Networks.

The deals, worth $3.9 billion in total, would transfer a considerable amount of spectrum to Verizon, which is already the nation's largest mobile carrier. In T-Mobile's Feb. 21 filing, the carrier said the deal would give Verizon an "excessive concentration" of wireless spectrum, according to a report from the Associated Press.

The Rural Telecommunications Group (RTG), one of the nine public interest groups, said in a Feb. 22 statement that the move was an "unprecedented step" to take away choices from American consumers. RTG's general counsel, Carri Bennet, added:

Rural markets and rural consumers will be impacted along with urban markets if these transactions are approved. By concealing the facts through confidential, highly redacted documents, Verizon Communications and Verizon Wireless are ensuring that the public cannot participate in the process leaving millions of consumers, including those living in and traveling to rural America, in danger of higher prices and less choice.

The deal is also thought to be troublesome regarding how Verizon and the cable companies will sell one another's products, an arrangement that Sen. Al Franken (D-Minn.) has said would turn "these rival companies into partners, rather than competitors.” In the end, it would result in higher prices and fewer choices for consumers, said Franken.

On Feb. 8, Sprint, T-Mobile, DirectTV, the Rural Telecommunications Group and the Rural Cellular Association also wrote to the FCC, requesting that its investigation into the deal be halted until details about said marketing arrangements were made clear.

"Neither the Commission nor interested parties have an adequate basis upon which to assess the public interest implications of the proposed transactions," the letter said. “The Commission should suspend both the pleading cycle in this proceeding and the informal 180-day 'transaction clock,' and reset them to zero once the applicants have provided full disclosure of their arrangements."

New Jersey's Division of Rate Counsel, a state consumer advocacy agency, last week also asked the FCC to block the deal, likewise citing the "spectrum accumulation issue,” according to the AP.

Verizon has defended the deal, saying it will make unused spectrum—a coveted resource these days—available to wireless subscribers, according to reports.

A need to free up or acquire spectrum is an often-repeated mantra among wireless carriers, since these companies are selling record numbers of smartphones and tablets to subscribers who are paying rising data-plan fees.

The carriers need increasing allotments of spectrum to support the ecosystems they've helped create.

AT&T fought for nearly a year to acquire the nation's fourth-largest carrier, T-Mobile, though to no avail. While AT&T executives argued that T-Mobile's spectrum would enable AT&T to roll out high-speed wireless broadband to more Americans, the FCC was ultimately uncomfortable allotting so much spectrum to one carrier, fearing it would devastate the ability of a smaller carrier to compete—just as T-Mobile has suggested that the Verizon deal with the cable companies would.

Comcast and its partners purchased the spectrum at an FCC auction in 2006. When plans to create a wireless company didn't come together, Comcast worked out the deal with Verizon, which both companies announced in December.

AT&T CEO Randall Stephenson, frustrated by the lack of available spectrum to build out AT&T's planned LTE network, said during a recent earnings call that the FCC needs to hold more auctions, and quickly.

"The key for us is spectrum," said Stephenson. "We need the FCC and Congress to ... get us to a point of open auctions, and that needs to be done as soon as possible."

In the absence of FCC auctions, RTG's Bennet added in the statement, "Verizon Wireless is systematically attempting to corner the market for commercial mobile wireless spectrum while simultaneously stripping existing and potential competitors of all their spectrum holdings. This practice is anti-competitive and a violation of antitrust law and should result in the FCC’s denial of all of the applications filed by Verizon Wireless.”