Verizon’s spectrum deal with cable is the end of broadband competition

The Verizon Wireless-cable companies spectrum deal signals the moment that the consumer benefits of the convergence of voice, video and data hit the wall. It’s a deal that’s great for Verizon, an acknowledgment of reality for the cable folks and a bummer for AT&T and consumers. The deal has a huge potential impact on wireless broadband competition.

Verizon had hinted it might resell its FiOS TV service over-the-top to folks outside the FiOS service area. Since TV can be a collection of bits delivered over the Internet, the traditional cable packages could become obsolete if the content companies and channels could figure out ways to license their content in new ways. Given that Verizon has both a broadband and a pay TV business, it had one of the best chances to push such a radical change in the pay TV business model. But now that it has some mysterious “agreements” with the cable guys, it’s unlikely that Verizon would try to infringe on their content businesses with its own over-the-top offering. That’s a bummer for consumers who might prefer a Verizon package over one from their local cable provider, but it’s also indicative of Verizon ceding the wireline market to cable companies.

Susan Crawford, an influential policy wonk and a professor at Cardozo Law School said: “This is the crystalline moment when the division of the marketplace becomes completely clear, even to people who haven’t been paying attention. VZ and ATT get wireless; cable gets wires; consumers are stuck. Wireless, like wired high-speed access already wholly dominated by the cable companies, is a natural monopoly service at this point, with incredibly high barriers to entry – so high that even current players, like T-Mo, are having trouble making it. Clearwire has nowhere to go at this point. So we have the worst of all worlds: no competition, and no regulatory oversight.”