Commenters Weigh In on Verizon's Cable Spectrum Deals

Public interest groups, wireless competitors say separate, exchange-of-service agreements should not be considered with this deal

By John Eggerton -- Broadcasting & Cable, 2/21/2012 3:23:28 PM

It was rush hour in the Verizon/SpectrumCo/Cox FCC docket Tuesday as comments came in in advance of the midnight Feb. 21 deadline.
 
At issue is Verizon's proposal to buy the advanced wireless spectrum bought at FCC auction but not built out by cable operators including the SpectrumCo consortium and Cox, a former SpectrumCo member.
 
Cable operators have signaled that their initial plans to possibly build out a wireless network have not panned out. They have an exchange-of-service deal with Verizon that will allow them to bundle and brand wholesale wireless phone/broadband service with their offerings. Cable operators have also tapped into the mobility of their broadband customers through Wi-Fi hotspot deals.
 
Feb. 21 was the deadline for comments and petitions to deny the Verizon deals, in which the telco is proposing to pay SpectrumCo partners Comcast, Time Warner Cable and Bright House a combined $3.6 billion and Cox another $315 million for their spectrum.
 
Among the comments the FCC asked for is how it should treat the separate, exchange-of-service agreements between Verizon and the cable companies.
 
Public interest groups and wireless competitors critical of the deal have said the commission should pay a lot of attention to them. In its comments, the Free State Foundation, a free market think tank critical of government overregulation and too heavy a hand in merger reviews, said the commission should not include those deals in its consideration of this one.
 
"These separate commercial agreements, which do not involve the transfer of any licenses, are not contingent on approval of the proposed transfers of spectrum licenses, or vice versa, and by their terms they do not call for commission review," said Free State in its filing.
 
The Tech Policy Institute was all for the deal, saying that the deal "should benefit consumers and does not in itself raise antitrust concerns because the spectrum is currently not being used," according to its filing.
 
They say that "pre-owned" spectrum is just as valuable as newly-auctioned spectrum, particularly if it had not been in use. The group argues that secondary markets also move spectrum to its higher-value use, which is what the FCC is aiming for in its incentive auction of broadcast spectrum, which will then be sold, most likely to wireless companies, and likely including Verizon.
 
A secondary market deal can get that spectrum in use much more quickly. "By quickly moving spectrum currently lying fallow to an entity that plans to use it, this transaction epitomizes the importance of secondary markets," said the group. "When secondary transactions are not possible, spectrum can languish for years while arrangements are made to auction it."