Verizon, Cable Partners to Testify About Spectrum Deal

Verizon and Comcast executives are among some of the witnesses to testify before a Senate subcommittee about the deal between the mobile carrier and the residential broadband giants.

Verizon Wireless' deal with cable companies Comcast, Time Warner, Bright House Networks and Cox Communications will come under federal scrutiny March 21, as a Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights convenes to question witnesses about whether the cable companies' deal with the nation's largest carrier is "A Harmless Collaboration or a Threat to Competition and Consumers?" as the hearing's title asks.

Witnesses for the hearing include Randal Milch, Verizon's executive vice president and general counsel; David Cohen, Comcast executive vice president; and Joel Kelsey, a policy advisor with the consumer advocacy group the Free Press.

Cohen, in a March 20 blog post on the Comcast site, said he's looking forward to presenting the "public interest benefits" of the deal, which "provides a quick and efficient path for Comcast to offer wireless services like those that are offered in bundles by AT&T, DirecTV" and other Comcast competitors.

Cohen also plans to share information about a new research and development joint venture that will allow the companies to "develop new technologies that compete with similar solutions offered not just by AT&T but also by Dish Network, Google, Apple, Microsoft and others."

DirecTV is among a number of organizations€”including Sprint and T-Mobile€”that have come out against the Verizon deal at this point, telling the Federal Communications Commission that the details of the deal are too opaque for interested parties to appropriately respond to.

The deal includes Verizon purchasing spectrum, an aggressively pursued asset in the wireless market, as increasing amounts of it are required to support the increasing numbers of smartphones, tablets and data cards coming online. While AT&T's failed 2011 bid for T-Mobile highlighted the industry's concern over any one carrier accumulating a spectrum pile considerably larger than the others, more contested are marketing-related details pertaining to Verizon and the cable companies bundling and selling product for each other.

Sen. Al Franken (D-Minn.), requesting the FCC look into the matter, noted that such a deal would turn "rival companies into partners, rather than competitors," which he feared "will ultimately mean less competition, less choice and higher prices for consumers."

Earlier this month, the FCC asked Verizon and its partners to submit some of the information they had redacted€”deeming it too private for inclusion€”from documents submitted to the commission.

In written testimony presented for the hearing, Free Press' Kelsey describes a mobile wireless market that's become "top heavy," with two carriers controlling a great portion of profits and market share and most consumers having one, or at most two, options for residential wired broadband service.

"Prices have remained high through artificially constructed bundles that force consumers into buying larger packages of services than they want or need," Kelsey stated. He added:

"This lessening of competition and the discipline it provided for the market has left consumers with fewer choices, higher prices and unfair terms and conditions. This is no accident. It is the result of public policy decisions over the last 12 years to deregulate the broadband marketplace while it still faced monopoly conditions, and to place a disproportionate amount of the nation€™s most valuable spectrum into the hands of just two wireless carriers."

Kelsey goes on to describe similar services in other countries, where they're faster and cheaper. In South Korea, for example, connections are three times faster and one-third less expensive, resulting in adoption rates close to 94 percent.

"This is not a result of the free hand of the market," says Kelsey. "This is the result of a failure on the part of our nation's policymakers over the past 15 years to protect and promote competition."

Verizon's Milch, in his written testimony, insisted, "No customer will see fewer choices or increased prices as a result [of the deal]."

At the hearing, which will take place in the Senate building at 2 p.m., analysts will be taking note of the rigorousness of the questions asked, and whether any more details about the marketing arrangement are revealed.