Verizon-Cable Deal Poses Big Threat to Internet Access, Competition

NEWS ANALYSIS: Federal authorities are taking a closer look at a "Joint Operating Entity" created by Verizon Wireless and cable companies that critics say will restrict competition in the communication industry and by definition would violate antitrust law.

Verizon and the group of cable companies from which it is planning to buy a chunk of AWS spectrum don't want you to know about a new Joint Operating Entity (JOE) that would control all aspects of how you get access to the Internet, what you can do online and how much it's going to cost.

Cloaked in a layer of secrecy behind a wall of redacted documents, filings to the Federal Communications Commission that can't be read and responses that are deliberately concealed, Verizon and its cable partners have agreed to stop competing directly with each other, to stop offering services that the others offer and to jointly develop technology that would control what you can do on their networks.

Sources familiar with Verizon's FCC filings said that the plan laid out by Verizon and its partners is "deeply troubling." Others familiar with the Verizon-Cable plan indicated that if it actually happens, it would effectively cancel the provisions of the Communications Act of 1996 that requires competition among carriers.

The JOE described in the material would effectively create an information cartel in which a currently secret board would decide how the various players in the Verizon-Cable deal would provide access and pricing.

This JOE is apparently already operating, and one of its first actions is for Verizon to stop offering stand-alone DSL service to consumers, according to claims in a letter from DirecTV to the FCC in an ex parte filing on May 16, and made available to eWEEK. The filing asserts that the parties in the Verizon-Cable deal include a series of Commercial Agreements that have started the ball rolling.

"Yet even in the short amount of time since the Commercial Agreements were finalized, Verizon's behavior offers direct evidence of ways in which the proposed transaction will alter the market to the detriment of competition and consumers," the DirecTV letter said.

Furthermore, the letter notes that Verizon had been working with DirecTV to develop a next-generation fixed wireless broadband product that would compete with cable companies, but abandoned the efforts immediately after entering into the Commercial Agreements.

Likewise, Verizon canceled a plan in which DirecTV had been selling stand-alone DSL to consumers. "Coming so soon after Verizon's subsidiary and the incumbent cable operators entered into the Commercial Agreements, this development cannot be explained other than in the context of those agreements," the letter said.

It is the Commercial Agreements between Verizon and the cable companies that created the JOE.