Verizon and a group of cable companies argued Friday the Federal Communications Commission shouldn't intercede in their proposed $3.6 billion spectrum transaction, which includes side agreements that would create what critics have labeled a communications cartel.
Under the proposal, Verizon would purchase unused spectrum from the cable companies, presumably to reduce the burden on its mobile networks. Verizon and the cable firms also signed confidential side agreements to cross-promote each other's products, leading critics to worry Verizon will stop competing with cable providers via products like FiOS.
T-Mobile and a number of public interest groups pressed the FCC to block the transaction last month, prompting Senate Judiciary antitrust subcommittee chairman Herb Kohl, D-Wis., to schedule a hearing on the transaction for March 21. In a response filed Friday (other exhibits), Verizon argued the FCC shouldn't review the deal because it doesn't involve a license transfer and the Department of Justice Antitrust Division is already examining the commercial agreements.
"[C]ommenters have failed to raise any basis for denying the transactions or imposing conditions. Accordingly, the Commission should move swiftly to recognize the public interest benefits associated with the spectrum assignments and unconditionally grant the Applications without conditions," states the filing.
"The argument from Comcast and partners that the FCC should stay out of the joint marketing deals with the country's largest cellular company is, frankly, absurd. The cross-marketing deals are as much a part of this deal as the spectrum -- announced together in the same release, offered to other cable companies," responded Public Knowledge legal director Harold Feld. "As we explained to the FCC earlier, the side agreements create a real danger that our communications markets will move from competition to collusion to cartel. Rather than address these concerns, Verizon and its cable partners continue to withhold key parts of the agreements while insisting that the FCC has no role in approving them."
Expect this issue to keep simmering until the antitrust hearing, which should be the first chance for officials to question whether the marketing agreements would preclude future competition between Verizon and cable providers. Public interest groups have targeted this issue as a top priority in the telecom space, particularly since firms like Verizon are viewed as driving the trend of "cord-cutting" among cable customers, who often rely on the same provider for both video and broadband.