D.C. Consultants Look To Kibosh Spectrum Sale

Cable-centric Verizon deal-breakers have a plan, seek funding

By John Eggerton -- Broadcasting & Cable, 5/14/2012 12:01:00 AM

Forewarned is, as they say, forearmed. The phrase may not have been born for major cable operators, including the top two MSOs, but it applies as they face what could be a new front in the fight for their sale of advanced wireless spectrum to Verizon.

In the wake of the FCC’s decision to briefly stop the clock on its consideration of the sale, Washington- based consultancy Information Age Economics is pitching “smaller” competitors to those cable companies in a strategy to block the deal.

“We are forming an action plan…seeking support for this analysis and report preparation from wireline carriers, wireless operators and public interest groups,” IAE said, adding the effort should not be very expensive, particularly if spread out over “multiple entities” looking to kibosh the deal.

The report would be subject to those carriers’ “review, improvement, and final approval.” IAE’s services would include an ex parte pitch of the “deliverable” to the FCC from the report’s sponsors.

Putting their heads together to work up the IAE action plan are marketer Barry Goodstadt, former FCC chief economist Alan Pearce and management consultant Martyn Roetter, among others. While Goodstadt said he has been in talks with some smaller telcos about funding the campaign, he would not identify them.

IAE suggested that the filings deal opponents have been unconvincing, weak and even “pathetic,” citing FCC officials, former regulators and policymakers for that handicapping.

The tenets of the new “cable cartel”-themed plan include:

• Painting a bleak picture of future broadband performance, coverage and prices in a cartel-like supply environment.

• Offering up evidence that broadband services are already less expensive and more advanced in a number of other countries than in the U.S.

• Detailing the impact of “sub-optimal broadband” on innovation, global competitiveness, and employment.

• Painting an unflattering portrait of “the traditional, recent and likely future behavior and actions of the members of the cartel,” including highlighting contradictions between statements by operators and Verizon about how competition, not collaboration, guarantees competition.

One of the many miscalculations, Goodstadt and company argue, is a focus on the impact on wireless companies rather than wired—the potential funding market IAE is targeting.

“Wireline operators, which will be threatened as much if not more by the potential cartel, have yet to join the opposition, which has been led by wireless operators focusing narrowly…on wireless issues alone,” IAE said.

The American Cable Association, which represents the small and mid-sized operators IAE is targeting, has not yet weighed in on the spectrum deal, though it has sought and received access to documents covered by the FCC's protective order. ACA had no comment on whether its members had been contacted by IAE.

A cable-centric attack on the deal would resonate with Sen. Al Franken (D-Minn.), who has been one of Comcast’s strongest critics. Last week, Franken pushed the FCC and the Department of Justice to take into account Comcast’s recent FCC losses in the Bloomberg TV and Tennis Channel complaints when it decides whether to approve the deal.

E-mail comments to jeggerton@nbmedia.com and follow him on Twitter: @eggerton