Verizon's cable deals reportedly get FCC approval, but DoJ remains unconvinced
FCC officials are prepared to approve Verizon Wireless' (NYSE:VZ) purchase of spectrum from a group of cable companies, according to a Reuters report. However, the Department of Justice reportedly is delaying that approval due to concerns that the proposed marketing deals between Verizon and the cable companies could stymie market competition.
The Reuters report, which cited unnamed sources familiar with the matter, said the FCC will hold off on giving its endorsement of the deals until the Justice Department is prepared to sanction the transaction. According to the report, the Justice Department is worried that the joint marketing deals will allow Verizon and the cable companies to squash competitors. Moreover, DoJ regulators are uneasy about the proposed "joint operating entity" that would be created between Verizon and the cable companies that would develop new technologies to support customers moving between wired cable connections and wireless services from Verizon.
"The Justice Department has big concerns about what mischief could be done in undefined agreements that would lock out competitors," one source told Reuters.
The Reuters report echoes a similar report from the Washington Post last month. That report, as well as the more recent one from Reuters, noted that Verizon's recent spectrum agreement with T-Mobile USA helped win over FCC officials.
According to Reuters, the transactions between Verizon and the cable companies won't be addressed until August at the earliest. The DoJ could sue to stop the deals, it could seek to modify the terms of the transactions or it could simply approve the deals and continue to monitor them.
Verizon's recently announced AWS spectrum swap with T-Mobile would cover 281 markets across the country, and it would result in an overall net transfer of spectrum from Verizon Wireless to T-Mobile and a cash payment from T-Mobile to Verizon. T-Mobile is planning use to AWS spectrum to launch an LTE network. Verizon is planning to use AWS spectrum from the cable companies for its own LTE network.
Verizon announced its planned $3.9 billion purchase of nationwide AWS spectrum from SpectrumCo--a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks--and Cox Communications late last year. The deals also include the option of either side reselling the services of the other. Verizon has also said it will sell its Lower 700 MHz A and B Block spectrum if the spectrum deals with the cable companies are approved.
In related news, The FCC plans to restart the clock on its review of spectrum deals between Verizon and the cable companies. The commission announced last month that it would temporarily halt its review of the transactions in order to gauge the impact of the spectrum deal that Verizon announced with T-Mobile. Public Knowledge and the Rural Telecommunications Group had been pushing the commission to give the groups until July 24 to file comments related to the T-Mobile agreement. But the FCC said that it wouldn't delay the review further.
Finally, 32 members of the U.S. House of Representatives released a letter to Federal Communications Commission Chairman Julius Genachowski expressing concern about Verizon's proposed deals with the cable companies.
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