The US Federal Communications Commission (FCC) and Department of Justice (DoJ) have paved the way for Verizon Wireless’ acquisition of spectrum from a number of cable companies and related transactions including a deal with T-Mobile USA – while placing some conditions on the deals.
In a statement from the FCC, Julius Genachowski, chairman, said that he was advising that the deals should be approved, observing: “Verizon Wireless has undertaken an unprecedented divestiture of spectrum to one of its competitors, T-Mobile, and has committed to accelerate the build-out of its new spectrum and enhance its roaming obligations”.
The FCC also said that the commercial elements of the deal will be modified to “preserve Verizon’s incentives” to build out its own FiOS fibre-optic network, “increase wireless competition”, and ensure that a proposed research and development alliance with the cable companies is “pro-consumer and that its products cannot be used in anti-competitive ways”.
Joseph Wayland, acting attorney general in charge of the Antitrust Division at the DoJ, said: “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.”
While the spectrum transaction was core to the deals, there was concern that related commercial agreements between Verizon and the cable companies could limit competition in the fixed-line market. This included a requirement for Verizon to re-sell services from the cable companies on an “equivalent basis” to its FiOS offerings, reducing the incentives for it to sell its own products aggressively.
And although Verizon will be the cable companies’ exclusive mobile partner for five years (including a provision for the marketing of services under their own brands), after this time they will be free to negotiate deals with other partners.
Verizon announced deals with SpectrumCo (a venture of Comcast, Time Warner Cable and Bright House Networks), Leap Wireless, and Cox Communications. It has also announced a complex agreement with T-Mobile USA, which will see the companies swapping spectrum in some markets, and with each partner gaining allocations in specific markets (T-Mobile is the biggest gainer).
Verizon has already said it will sell some of its 700MHz spectrum holdings when the current deals go ahead – with reports stating it has already been in contact with 36 interested parties.