The U.S. Department of Justice will allow both Verizon’s proposed acquisitions of spectrum from the cable companies and T-Mobile USA’s contingent purchase of a significant portion of that spectrum from Verizon to go forward. The transactions facilitate active use of the spectrum and will benefit wireless consumers, according to the department. The transactions still must be reviewed by the FCC.
But the spectrum agreement came with a cost. Verizon and SpectrumCo (Comcast, Time Warner Cable, Bright House Networks and Cox Communications) will have to make changes to several agreements concerning both the sale of bundled wireless and wireline services and the formation of a technology research joint venture, both of which were deemed to be anticompetitive by the Justice Dept.
“By limiting the scope and duration of the commercial agreements among Verizon and the cable companies while at the same time allowing Verizon and T-Mobile to proceed with their spectrum acquisitions, the department has provided the right remedy for competition and consumers,” said Joseph Wayland, acting assistant attorney general in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division’s enforcement action ensures that robust competition between Verizon and the cable companies continues now and in the future as technological change alters the telecommunications landscape.”
Verizon and the cable companies, which are direct competitors in many local markets, had become just a little bit too cozy for the Justice Department’s liking, having entered into a series of commercial agreements that required the companies to sell each other’s products and create an exclusive technology research joint venture.
“The series of commercial agreements between Verizon and the cable companies would have threatened this competition,” the Justice Department wrote. “Most notably, the agreements, as originally structured, would have required Verizon Wireless to sell the cable companies’ services on an “equivalent basis” with FiOS where FiOS is available, thereby reducing Verizon’s ability and incentive to sell its own services aggressively.”
In December of last year, SpectrumCo, a joint venture among Comcast Corporation, Time Warner Cable and Bright House Networks, announced an agreement to sell Verizon its 122 Advanced Wireless Services spectrum licenses covering 259 million POPs for $3.6 billion. News of the deal and the approval by Justice is good for the wireless infrastructure industry. The added spectrum will undoubtedly fuel Verizon Wireless, as well as T-Mobile, in the deployment of cell sites and amendments to existing sites.
Jonathan Campbell, PCIA director of government affairs, reacted to the decision, saying “The Verizon-SpectrumCo deal will benefit wireless consumers by freeing up unused spectrum which — along with essential wireless infrastructure — can be used to deliver next-generation wireless services. PCIA applauds the parties, the Department of Justice and the Federal Communications Commission for their efforts to reach an agreement that will facilitate deployment of vital wireless services.”
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