August 13, 2012, 11:28 AM — As Verizon Wireless' $3.9 billion spectrum and marketing agreements with several of the nation's largest cable companies near the end stages of a regulatory review, critics are urging antitrust authorities to block the transactions outright or attach significant conditions that they say are necessary to preserve competition and protect consumers.
Under the agreement, Verizon Wireless would acquire a swath of spectrum from Comcast, Time Warner Cable and Bright House Networks (as well as Cox, in a separate transaction) and the firms would enter into joint marketing and operating agreements through which they would promote and sell each other's services.
But for critics who warn against greater consolidation in the telecommunications sector, the deal would further an alarming trend and erode competition, likely driving up prices.
"We should be very careful about approving deals like this which turns competitors into collaborators," Rep. Jerrold Nadler (D-N.Y.) told reporters on a conference call. "This should raise serious red flags."
In July, Nadler was one of 32 members of Congress who signed a letter to the heads of the Justice Department and Federal Communications Commission urging a close review of the transaction and suggesting that the deal violates provisions of the 1996 Telecommunications Act concerning marketplace diversity.
"We want firms to compete, not capitulate or collaborate," Nadler said.
Rep. Brian Higgins, another New York Democrat, called the deal "anti-city" and "anti-rural communities," adding that he "urge[s] a renegotiation or rediscussion of this deal."
Of particular concern are the joint agreements that raise the prospect of Verizon ceding its television and broadband Internet businesses to the cable outfits while strengthening its position in the wireless market.
But that confuses Verizon Communications and its namesake wireless operator, in which it holds a majority stake, according to Ed McFadden, a spokesman for Verizon Communications. McFadden noted that the telecom giant's FiOS service is hugely profitable and insisted that the firm will continue to compete aggressively should the proposed transactions win regulatory approval.
"FIOS has been taking market share from the cable companies consistently for years now. That's not going to change," he said. "Verizon FiOS will go head to head with cable anytime, anywhere."
McFadden said that Verizon expects approval of the cable agreements before the end of the summer.