An August 15 article in Bloomberg Business Week reported that the Department of Justice approved the deal between Verizon Wireless and SpectrumCo. (Comcast, Bright House Networks and Time Warner Cable), and separately the agreement between Verizon Wireless and Cox Communications.
The transactions will allow Verizon to purchase $3.9 billion in advanced wireless system (AWS) spectrum from the four cable companies. According to TR Daily, FCC Chairman Julius Genachowski has voted in favor of granting approval. CED’s Broadband Direct reported on August 16 that Genachowski circulated a draft order among commissioners ahead of the final vote. Commissioner McDowell also voted to approve the transfer of spectrum to Verizon. According to the TR Daily report, it is unclear if any of the other commissioners had voted.
This is good news for Verizon. Earlier this summer Verizon engineered a deal with T-Mobile USA to divest itself of some of its AWS spectrum. The T-Mobile move seemed designed to earn government approval for the larger business arrangements with the cable companies. Broadband Direct quotes Chairman Genachowski as saying, “In response to agencies objections, the parties have made a number of binding precompetitive commitments and will also make fundamental changes to their agreements.”
A Washington Post article published August 16 points out that competition in the digital broadband space has not developed in the manner that policymakers had hoped. Consumers are limited to one of a few dominant regional service providers that offer service in expensive bundles with broadband, telephone and television service. According to the article, those critical of the Verizon-cable deals cite concerns with limited choices for consumers and higher rates for services. The Post article omits rural consumers that in most cases are limited to a single wireless provider or no provider at all.
The Post goes on to report that new providers competing in the wireless market typically struggle due to high infrastructure costs, increased cost of delivery to the consumer due to low population density and distance and terrain issues. The trailing position they take competing with the larger, more entrenched service providers often places greater difficulties on them due to consumer perceptions of the products and services they provide and attempting to generate business in a highly competitive, established environment.
Verizon announced its deals with SpectrumCo. and Cox Communications in December 2011.
