SpectrumCo Critics Weigh In on Verizon–T-Mobile Trade

Caution FCC that issues with marketing agreements remain

By John Eggerton -- Broadcasting & Cable, 6/25/2012 2:01:12 PM

Reaction from SpectrumCo deal skeptics came thick and fast to Verizon Wireless' announcement Monday that it had struck a new deal to trade spectrum with T-Mobile, subject to FCC approval of both this deal and SpectrumCo, Verizon's proposed purchase of advanced wireless spectrum from cable operators, some of which will be part of the T-Mobile exchange.

Public Knowledge, which has been critical of the SpectrumCo deal, was suspicious of the new proposal.

"That Verizon Wireless feels the need to buy off T-Mobile to close its spectrum/marketing deals with the country's largest cable operators underscores just how bad this deal really is for American consumers and competition generally," said Public Knowledge senior VP Harold Feld. "As Public Knowledge has consistently pointed out, the true danger lies not only in the concentration of spectrum in the hands of the leading wireless provider, but with the cozy, cartel-like arrangements between Verizon, Comcast, and the other MSOs party to the deal...The proposed license transfer from Verizon Wireless to T-Mobile does nothing to address the ability of Verizon and its cable partners to use its marketing and research agreements to develop a patent portfolio capable of bringing the mobile patent wars from handsets to online video."

The Alliance for Broadband Competition was similarly focused on the "cartel" issue.

"While it's nice that Verizon will cede a small portion of its vast spectrum holdings to T-Mobile," said the group in a statement, "that does nothing to mitigate the fact that Verizon and Cable want to stop competing, stop investing, and stop innovating to the great detriment of consumers and the American economy. Our position remains the same: we urge the DOJ and FCC to continue their thorough examination of these agreements to ensure a competitive telecommunications industry."

Verizon and the cable operators from which it wants to buy the spectrum also have associated cross-marketing deals in which they are selling each other's services and teaming for R&D on how to integrate wired and wireless services. Those deals have activist groups concerned they are getting too chummy.

"The evidence presented in Verizon's deal with SpectrumCo definitively proves that Verizon is badly overstating its need for the cable companies' spectrum," said policy adviser Joel Kelsey, but added: "We will reserve our judgment on the Verizon-T-Mobile deal until more details are disclosed, but our goal all along has been to ensure that consumers have access to more competitive wireless market and that spectrum policy is used to achieve, not thwart, that goal."

"The threat of job loss and higher consumer prices from the proposed Verizon Wireless-Big Cable deal remains, even if today's announcement resolves some of the FCC's concerns about one piece of the agreement," said Debbie Goldman, telecommunications policy director for the Communications Workers of America (CWA). "The CWA -- along with major consumer groups and elected officials --  continues to voice concerns with federal regulators about the monopolistic cross-marketing arrangement and urges regulators to put conditions on this deal to ensure it is in the public interest."