Sen. Lee: Verizon–SpectrumCo Won't Restrict Competition

Tells FCC, DOJ cable sale of spectrum should be boon to choice, innovation
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Like the Washington equivalent of Newton's Third Law, the
letter from Senate Antitrust Subcommittee Chairman Herb Kohl (D-Wis.) to the
FCC and DOJ Thursday with concerns about the Verizon-SpectrumCo spectrum sale
was followed by an equal and opposite reaction from the same subcommittee's
ranking Republican, Mike Lee.

Lee (R-Utah), also in a letter to the FCC and Justice, asked
for a similarly careful review of the arguments made by opponents of the deal,
but came to a much different conclusion. Lee said that based on his own review
of the available evidence, he did not think the spectrum purchase or associated
marketing agreements would restrict competition or otherwise harm consumers.
Kohl, by contrast, suggested there were numerous reasons to believe it could.

Lee went beyond the Hippocratic Oath approach of suggesting
the deal would do no harm. "'[T]he evidence suggests that these agreements
are primarily pro-competitive and will benefit consumers by putting previously
fallow spectrum to efficient use, expanding consumer choice...and spurring
innovation."

Those are all stated goals of the FCC's push for more
broadband spectrum. The cable operators trying to sell Verizon their spectrum
have said they don't plan to use it to build out a facilities-based wireless
network to compete with Verizon, AT&T and others.

Lee argues that looked at through the prism of a spectrum
crunch, the deal "creates an obvious efficiency and is, at its most
fundamental level, pro-competitive."

Lee argues that the FCC should apply its spectrum screen
narrowly, only applying remedies in areas where that screen is exceeded -- the
screen is a guideline on what level of concentration of spectrum triggers
further review. Kohl, by contrast, suggested remedies might be necessary even
where the screen is not exceeded.  Lee counters that industry players rely
on the screen and to diverge from that would raise "serious concerns"
about evenhanded treatment. He also advised the FCC not to modify that screen,
suggesting it would not be fair to change regulatory horses in midstream.

Lee says that other criticisms of the transfer "ignore
economic realities" and assume, improperly, that the government should be
in the business of picking marketplace winners and losers.

Kohl wanted the FCC to look closely at T-Mobile complaints
that the timing of the deal was intended to prevent it from making a bid for
that spectrum -- it was in the midst of an unsuccessful effort to get Justice
and the FCC to OK its merger with AT&T. But Lee says he sees no reason why
the cable companies would not want another bidder in the process and points out
that Comcast has said it reached out to "virtually every" major
player in the wireless industry.

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