Verizon-Cable Spectrum Proposal Draws Strong Resistance in Washington

By Wayne Rash  |  Posted 2012-05-20

Verizon-Cable Spectrum Proposal Draws Strong Resistance in Washington

A number of additional companies and consumer interest groups rose in opposition to the revelation that Verizon and several of the largest cable companies in the United States, including Comcast, Cox and Time Warner, were working together to create what looks like a non-competitive Internet market cartel.

As I mentioned in my earlier column on the topic, a group of former adversaries has teamed up to fight Verizon€™s proposed purchase of Advanced Wireless Services (ASW) spectrum owned by several cable companies. But there is more to it than that. The group called The Alliance for Broadband Competition includes such diverse players as Public Knowledge, T-Mobile, Sprint, the Competitive Carriers Association and the Rural Telecommunications Group.

The members of the group may bring back memories of the groups that opposed the AT&T/T-Mobile merger, except now T-Mobile is joining the opposition. While their interests in the Verizon issue vary from group to group, they all agree that Verizon should not be able to buy spectrum from the cable companies and that Verizon and the cable companies should not be allowed to create their so-called Joint Operating Entity (JOE).

€œVerizon and the cable companies are truly creating an axis of broadband power that threatens competition and consumer choice to their very core,€ said Carri Bennet, Rural Telecommunications Group€™s [RTG] general counsel, in a prepared statement.

€œVery quietly, this axis has entered into complex transactions that will forever change how consumers access voice, Internet and video service, which companies these consumers will purchase those services from and, at the end of the day, what those services will cost. Tens of millions of Americans, including those in rural America, are now in the cross-hairs and the Alliance is ringing the warning bell calling for a stop to the onslaught before it is too late.€

RTG charged that Verizon and the cable companies are entering into reseller, agency and joint-venture relationships that impact how consumers access the Internet. RTG said in its statement that the organization is planning to educate the FCC and the Department of Justice as to what Verizon and its cable partners are really up to.

Verizon has not responded to requests for comment on the JOE and reaction to the opponents statements.

The Competitive Carriers Association takes a similar stance. The organization of small wireless carriers said in a filing to the FCC that Verizon doesn€™t need more spectrum, especially at the cost of marginalizing smaller carriers. In a prepared statement, CEO Steve Berry said that the Verizon deal needs to be looked at very carefully by the FCC.

€œThe Verizon-Cable deals require strict scrutiny, enforceable conditions helping to restore the competitive marketplace, and divestiture in markets where the transfers are not in the public interest,€ Berry said. €œSpectrum divestitures should be imposed by the FCC, not selected by Verizon, and the FCC should be more concerned with requiring interoperability and commercially reasonable roaming than ever. Now is the time for the FCC to insure policy decisions that contribute to a competitive wireless market,€ he added.

Public Knowledge, meanwhile, wants to make sure that the government knows about the JOE, and contends that it€™s a huge threat to the public.

Rival Carriers Worry About Verizons Spectrum Stock

€œWe are particularly concerned that there should be more attention paid to the Joint Operating Entity set up by the companies to create new technologies that could well set new and anticompetitive standards that would hurt consumers and restrict innovation,€ said Harold Feld, legal director for the group.

Public Knowledge is especially concerned about the secrecy surrounding the Verizon Cable deal, and has asked the FCC to release the full contents of the redacted documents that Verizon supplied in response to questions from the FCC. As it happens, sources familiar with the documents submitted to the FCC say that some of what was supplied to the FCC was redacted so that even the FCC itself couldn€™t view the answers.

The wireless phone companies are also concerned about the amount of wireless spectrum that Verizon would gain if the purchase goes through. A T-Mobile spokesperson told eWEEK that Verizon€™s plan is against the public interest. In addition, filings from T-Mobile to the FCC have said that Verizon already holds far more spectrum than it uses and is the least spectrum-efficient carrier in the United States.

€œIt will result in excessive concentration of this especially important spectrum for LTE in the hands of the nation€™s largest wireless carrier, who has been sitting on spectrum in this very band for years without making the slightest effort to put it to use," the T-Mobile spokesman said.

€œThe end result will be to foreclose competition and harm consumers. Additionally, Verizon€™s simplistic claim of being the most efficient user of spectrum falls apart upon closer examination of the facts€“as outlined in T-Mobile€™s filings at the FCC, when properly measured, Verizon is the least-efficient user of spectrum among the nationwide wireless carriers,€ the spokesman said.

Sprint also worries about the spectrum use by Verizon, but is particularly concerned about the damage to broadband and wireless competition. In a prepared statement, a Sprint spokesperson told eWEEK, €œThe cooperative arrangements between these companies encompass wired and wireless technologies, voice, video, and data services: the full complement of 21st century electronic communications services and have the potential to touch each consumer and every government, business, health care and educational institution in the United States. Sprint urges the FCC to closely examine whether the collaboration of these telecommunications and cable giants upends competition between these historical industry rivals, resulting in reduced choices and increased prices for consumers.€

While none of the companies would use the word €œCartel€ in their statements, it€™s pretty clear from their descriptions that it€™s exactly what they view it as. It€™s worth noting that Public Knowledge does use the word €œcartel€ in other descriptions of Verizon€™s deal with the cable companies.

Cartels, as defined by U.S. antitrust law, are illegal. Maybe this is why Verizon and the cable companies were hoping this would proposal would somehow fly under the FCC€™s radar. But the noisy protests expressed by multiple diverse interests have ensured that this deal is very prominent on the FCC€™s proverbial radar scope.

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