Originally published: December 20, 2011
Last updated: December 22, 2011 - 11:00pm
At least one public interest group is complaining that Verizon's spectrum deals with cable companies are more damaging to consumers than AT&T's long-shot takeover of T-Mobile, but there's a critical difference: While AT&T sought to buy an actual competitor, Verizon is trying to take out a potential one. Regulators haven't been especially aggressive in blocking the former, but they've been even more reluctant to block the latter.
At issue is the spectrum that cable operators leased in 2006, when the Federal Communications Commission auctioned off licenses for "advanced wireless services." These airwaves flank the frequency band used for 3G mobile data traffic and they can also support 4G services. Large swaths of the AWS band were leased by the five largest mobile-phone carriers. But the country's biggest cable TV operators, which banded together to bid for spectrum, were able to lease enough licenses to stitch together a national network. The cable operators said at the time that they weren't planning to launch a mobile-phone company to compete with the likes of Verizon and AT&T. Instead, they said the purchase gave them "flexibility and strategic options." The airwaves grew in value over the following five years, but the licenses remained unused. This month, Verizon announced a pair of deals to buy the licenses held by various members of the cable operators' consortium -- first with Comcast, Time Warner Cable and Bright House Networks, then with Cox, which had launched a mobile-phone service only to start phasing it out earlier this year. (The deals netted cable operators more than $1 billion in profit, a nice "strategic option.") It also announced a swap with Leap Wireless to exchange some of Verizon's turf in the 700 Mhz band for some of Leap's AWS licenses. The cable companies plan to market Verizon's wireless service, and Verizon has agreed to market their video services. The joint marketing arrangement strongly suggests that Verizon won't be expanding its own pay-TV offering, FiOS TV, any time soon. This prospect worries Andrew Jay Schwartzman, policy director for the Media Access Project public interest group.
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