Justice Department To Allow Verizon’s Spectrum Deal With Cable Companies

    August 16, 2012
    Chris Crum

The Justice Department announced today it will allow Verizon’s proposed acquisitions of spectrum from cable companies Comcast, Time Warner, Bright House Networks and Cox Communications (as well as T-Mobile’s contingent purchase of a significant portion of that spectrum) to go forward, under a proposed antitrust settlement.

The DoJ is, however, requiring some changes to the agreements concerning the sale of bundled wireless and wireline services and the formation of a technology research joint venture. Through the joint venture, Verizon would collaborate with the cable companies to develop new technologies that integrate wireless and wireline products.

“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,” said Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, Joseph Wayland. “The Antitrust Division’s enforcement action ensures that robust competition between Verizon and the cable companies continues now and in the future as technological change alters the telecommunications landscape.”

The proposed settlement forbids Verizon from selling cable company products in FiOS areas. It also removes contractual restrictions on Verizon’s ability to sell FiOS. Verizon will also no longer be able to resell cable companies’ services to customers in arreas where it sells DSL Internet services after December of 2016.

Verizon’s agreements with the cable companies are required to be amended in the following ways:

  • Verizon retains the ability to sell bundles of services that include DSL, Verizon Wireless and the video services of a direct broadcast satellite company (i.e., DirecTV or Dish Network);
  • After five years, the cable companies are no longer barred from selling the wireless services of Verizon Wireless’s competitors, and may partner with other wireless providers;
  • The cable companies can elect to resell Verizon Wireless services using their own brand at any time as provided for under the amended agreements; and
  • U pon dissolution of the technology joint venture, all members receive a non-exclusive license to all the joint venture’s technology, and each may then choose to sublicense to other competitors.

Finally, the settlement forbids any form of collusion and the exchange of competitively sensitive information.

Read the DoJ’s full announcement here.