Verizon spectrum deals could hurt competition, say critics
Critics say Verizon's proposed purchase of spectrum from cable companies could lead to higher prices, less choice
IDG News Service - Verizon Wireless' proposed purchase of unused mobile spectrum from four cable companies will reduce the incentive for the companies to compete against each other in the video and broadband markets, critics told U.S. lawmakers Wednesday.
The spectrum deals, announced in December, include agreements that would allow Verizon and the four cable companies to market each others' products, leaving the companies with less incentive to compete against each other on price and services, said Joel Kelsey, policy adviser at Free Press, a digital rights group.
"These agreements simply represent a deal between these companies to stay out of each others' way in perpetuity," he said. "They put former rivals on the path to cooperation, not competition."
The deals, which would allow Verizon to purchase mobile licenses covering more than 280 million U.S. residents, would also kill potential competition in a mobile industry increasingly dominated by Verizon and AT&T, Kelsey said. The U.S. Federal Communications Commission needs to kill the deal to preserve mobile competition, he told the antitrust subcommittee of the U.S. Senate Judiciary Committee.
The two deals, for about US$3.9 billion, would allow Verizon to buy 20MHz of spectrum from SpectrumCo, a joint venture among Comcast, Time Warner Cable and Bright House Networks, and from Cox Communications. The deals will help Verizon offset a predicted spectrum crunch, aid Randal Milch, executive vice president and general counsel at Verizon Communications.
It's "critical" that the cable spectrum be used for mobile services, with smartphone traffic predicted to be more than 25 times higher in 2015 than it is today, Milch said.
Several senators questioned whether the spectrum and joint marketing deals will be good for U.S. consumers. The deal could lead to higher cable TV rates, with less incentive for Verizon Wireless' parent company, Verizon Communications, to aggressively market its Fios video service against Comcast and other cable firms, said Senator Al Franken, a Minnesota Democrat.
"This is really at the heart of why I am skeptical about this deal," Franken said. "It's almost as if your companies got in a room together, and you agreed to throw in the towel and stop competing against each other."
Representatives of Verizon and Comcast said their companies will continue to compete against each other in video and broadband services. The Fios video service is "a superior product that customers like and we are going to push it as hard as we can," Milch said.
After Verizon has spent $23 billion to build its Fios broadband and video network, it doesn't make sense for the company to stop competing, Milch said.
Comcast talked to most mobile carriers before deciding to sell the spectrum to Verizon, said David Cohen, Comcast's executive vice president. The Verizon proposal represented the best deal for Comcast and consumers, he said.
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Pay-as-you-Grow Data Protection: IBM Tivoli's Full-featured Data Protection Suite for Small to Medium Businesses IBM Tivoli Storage Manager Suite for Unified Recovery gives small and medium businesses the opportunity to start out with only the individual solutions...
- Streamline Data Protection with IBM Tivoli Storage Manager Operations Center IBM Tivoli Storage Manager (TSM) has been an industry-standard data protection solution for two decades. But, where most competitors focus exclusively on Backup...
- Simplify and Consolidate Data Protection for Better Business Results Learn about IBM® Tivoli® Storage Manager Operations Center, which provides advanced visualization, built-in analytics and integrated workflow automation features that leapfrog traditional backup...
- HP HAVEn: See the big picture in Big Data HP HAVEn is the industry's first comprehensive, scalable, open, and secure platform for Big Data. Enterprises are drowning in a sea of data...
- Meg Whitman presents Unlocking IT with Big Data During this Web Event you will hear Meg Whitman, President and CEO, HP discuss HAVEn - the #1 Big Data platform, as well...
- The New Way to Work Knowledge Vault This Knowledge Vault focuses on how, in today's increasingly virtual world, it's more important than ever to engage deeply with employees, suppliers, partners,... All Legal White Papers | Webcasts