February 22, 2012, 11:11 AM — The U.S. Federal Communications Commission must block Verizon Wireless from buying wireless spectrum from cable providers because two proposed deals would concentrate too much spectrum in the hands of one company, a coalition of advocacy groups said.
The deals, which also allow Verizon and the cable firms resell each others' services, "give rise to serious concern that not only will these providers decline to compete further with one another, they will actively collude with one another," the groups said in a Tuesday filing with the FCC.
Two spectrum deals that Verizon announced in December "would fundamentally alter the nature of the telecommunications world in a manner utterly contrary to that intended by the 1996 Telecommunications Act," the groups said in their FCC filing. Congress, in the 1996 law, focused on increasing competition in the telecommunications market.
Among the nine groups filing the petition at the FCC were Public Knowledge, the Media Access Project, the New America Foundation Open Technology Initiative, and the National Consumer Law Center.
"To 'supersize' Verizon Wireless with additional spectrum ... so that the largest wireless operator can better promote the services of the largest incumbent cable operators directly undermines the pro-competitive policies of the 1996 Act and is thus contrary to the public interest," the groups said.
Also filing a petition this week asking the FCC to block the deal was T-Mobile USA, a competitor of Verizon's that tried unsuccessfully during the past year to merge with AT&T. Verizon's large spectrum holdings already give it "significant advantage" over smaller competitors in the race to deploy high-speed LTE (Long Term Evolution) mobile broadband service, T-Mobile said in its filing.
"The acquisitions will limit the deployment of LTE by competitors of Verizon Wireless and the bandwidth available for such deployments," T-Mobile said in the filing. "If these transactions go forward, the end result will be less LTE capacity available overall and reduced competition in the provision of LTE, which would be contrary to the public interest."
Verizon announced in December a deal to buy underused spectrum licenses covering 259 million U.S. residents from SpectrumCo, a joint venture among Comcast, Time Warner Cable and Bright House Networks, for US$3.6 billion.
Later that month, Cox Communications announced plans to sell wireless spectrum licenses covering 28 million U.S. residents to Verizon for $315 million.
In the deals, Verizon and the cable providers agreed to set up joint operating entities to develop new technologies to link voice, video and wireless traffic. The technology that could result would be a new standard controlled by companies that control approximately 40 percent of the wireless market, 40 percent of the residential broadband markets and 40 percent of the residential video market, the groups said in their filing.
Verizon defended the deals.
"We believe the spectrum purchase is in the public interest, and will address the needs of all consumers, putting spectrum to work to meet growing demand," the company said in a statement. The deals are consistent with the FCC's goal of ensuring "that existing spectrum is used by providers who can use it efficiently," the company said.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.
