D.C. Reacts to Verizon Spectrum Sale

Public Knowledge finds upside to $3.6B deal
Author:
Publish date:

Washington reaction varied to the news that cable operators were selling the spectrum they won at the FCC's Advanced Wireless Services auction in the 2006.

Mark Cooper of the Consumer Federation of America said it would be a good deal for Verizon and a bad deal for consumers. In response to the announcement, he said the deal would result in higher prices and less choices. "The auctioning of spectrum has totally failed to promote competition in wireless," he said. Cooper said it was ironic that the announced deal came a day after House Republicans voted to foreclose the development of unlicensed spectrum that would give the public alternatives to paying Verizon -- or AT&T -- for cellular service.

How will the FCC greet the news that spectrum meant to promote wireless competition was not used and is now being sold at a mark-up to one of the biggest players? "When the applications come before us, the FCC will undertake a thorough, fair and fact-based review of the proposed transaction," said an FCC spokesperson.

"With this purchase, almost 75 percent of the spectrum auctioned in the last decade has ended up in the hands of the top two wireless firms (AT&T and Verizon) and 90 percent with the top four firms," said Cooper. AT&T's acquisition of more spectrum has been one of the public interest groups' knocks on the proposed T-Mobile deal as well. Coops also said that Verizon and Comcast would no longer be potential wireless competitors.

By contrast, Public Knowledge saw some upside to the deal. "It is good news that Verizon is paying $3.6 billion to buy useful spectrum from the cable company consortium. Spectrum is better held in the hands of those who will use it, as opposed to those who don't," PK legal director Harold Feld said in a statement.  "The transaction also shows how relatively cheaply more spectrum can be acquired by those who need it. The purchase price is about one-tenth of the amount AT&T wants to pay for T-Mobile to theoretically solve AT&T's spectrum shortage."

But he shared with Cooper concerns about reducing competition, in the video as well as broadband space. "Consumers have benefited from head-to-head competition between Comcast and Time Warner (the major partners in SpectrumCo) and Verizon FIOS," he said. "If this deal becomes a way for the companies to coordinate their product offerings to avoid competition, or a way to work together to exclude other competitors such as DISH from the mobile and wireless data market, that would obviously be a bad outcome. "

Scott Cleland, chairman of NetCompetition.org (its members include Comcast, Time Warner Cable and NCTA), called the Verizon deal transformative and an example of how new markets are being crated out of the "scrambling of services.

"This deal's cross-reselling arrangement -- cable bundling Verizon's wireless service and Verizon reselling cable services via its stores -- is very similar to the evolving competitor-partner layered relationships that broadband communications providers have morphed into over the last few years," he said in a statement, "with manufacturers, software providers, retailers, content companies, financial companies, and platform players like: Apple, Google, Microsoft, Facebook and Amazon, to name the most prominent."

Related