Verizon Nears Control of Broadband Market

     MANHATTAN (CN) – Verizon allayed antitrust concerns over its $3.6 billion deal with cable companies by agreeing to narrow restrictions that expire in five years.
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     The telecommunications giant must still wait for approval from the Federal Communications Commission, however, before it can buy wireless spectrum covering 259 million Americans from Comcast, Time Warner Cable and Bright House Networks.
     In a complaint and final judgment filed simultaneously Thursday, the Justice Department explained how subsequent agreements between Verizon and its competitors could limit consumer options.
     Under a December 2011 deal between Verizon and the cable providers, Verizon would bundle its wireless services with cable package, and the cable providers would sell Verizon their unused wireless spectrum licenses.
     “In June 2012, Verizon Wireless agreed to resell some of that spectrum to T-Mobile USA, the smallest of the nation’s four nationwide wireless carriers,” according to the complaint.
     Verizon also announced a public process to sell other previously unused spectrum.
     Federal regulators complained that the deals could stifle competition and stand in the way of innovation.
     Instead of blocking the deal, the head of the Justice Department’s Antitrust Division explained that the parties agreed to a set of expiring restrictions.
     “By limiting the scope and duration of the commercial agreements among Verizon and the cable companies while at the same time allowing Verizon and T-Mobile to proceed with their spectrum acquisitions, the department has provided the right remedy for competition and consumers,” Acting Assistant Attorney General Joseph Wayland said in a statement.
     The settlement entitles the cable companies to sell Verizon wireless services and partner with other wireless providers after five years.
     Verizon can still bundle services like DSL, wireless and satellite broadcast.
     “The proposed settlement forbids Verizon Wireless from selling cable company products in FiOS areas and removes contractual restrictions on Verizon Wireless’s ability to sell FiOS, ensuring that Verizon’s incentives to compete aggressively against the cable companies remain unchanged,” the Justice Department said. “In addition, under the proposed settlement, Verizon Wireless’s ability to resell the cable companies’ services to customers in areas where Verizon sells DSL Internet service ends in December of 2016 (subject to potential renewal at the department’s sole discretion), thereby preserving Verizon’s incentives to reconsider its decision to stop building out its FiOS network and otherwise innovate in its DSL territory.”
     As reported by Ars Technica, Gigi Sohn, head of the advocacy group Public Knowledge, said that the settlement does not go far enough.
     “The proposed conditions on this transaction attempt to alleviate some of the harms that will arise from a lack of competition, and policymakers deserve credit for trying to make the best of a bad deal,” Sohn reportedly said. “However, it is not enough for the anti-competitive cross-selling agreement to be limited in time or scope – it should not happen at all.”
     Public Knowledge urged the FCC and Congress to step in where prosecutors failed.
     “Congress and the FCC should pursue new policies to stimulate competition in wireline Internet access service – or resign themselves to regulating a broadband monopoly,” Sohn concluded.

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