Senate to probe Verizon's deals with cable companies

A Senate panel will hold a hearing to explore Verizon Wireless' (NYSE:VZ) $3.9 billion purchase of spectrum from cable companies as well as the cross-marketing arrangements that are part of the deals.

Sen. Herb Kohl (D-Wisc.) said the Senate Judiciary Committee's antitrust subcommittee will probe the deals at a hearing, likely scheduled for the end of the month after the President's Day recess. "Plans are well underway for a hearing to examine the impact of Verizon's spectrum purchase from a number of cable companies and a separate marketing agreement to cross-sell each other's products," Kohl said in a statement. "The subcommittee carefully examines questions about competition in the wireless and video markets, with the ultimate goal of protecting consumers and reducing their cable and cell phone bills, and these deals are no exception."

In December Verizon agreed to pay $3.6 billion for the nationwide AWS spectrum licenses held by SpectrumCo, a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks. Separately, Verizon said it will buy Cox Communication's 20 MHz of AWS spectrum covering 28 million POPs for $315 million. All of the deals include the option of Verizon reselling cable services and cable companies reselling Verizon service. The Department of Justice and FCC still need to approve the spectrum transactions.

Representatives from Verizon, Comcast and Time Warner Cable declined to comment, according to Reuters.

Verizon and the cable companies have argued that the marketing deals should not be subject to regulatory review and that the FCC should look at the spectrum purchases in isolation. However, public interest groups have said that the cross-marketing deals could curb competition for broadband services.

News of the inquiry comes as Verizon and Comcast launched joint marketing efforts in the San Francisco Bay Area to sell bundles of wireless, cable TV, landline and residential Internet services (see related story). Verizon and Comcast launched their joint marketing campaign in Seattle and Portland, Ore., last month, and Verizon intends to expand it to other markets this year. 

For more:
- see this Washington Post article
- see this Reuters article
- see this National Journal article

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