Verizon’s Worrisome Cable Deals

[Commentary] AT&T’s decision to drop its bid for T-Mobile is a victory for the Justice Department and the Federal Communications Commission, which steadfastly opposed a deal that would have locked the wireless market into a duopoly and been bad for consumers. But the battle to defend competition in telecommunications is hardly over.

As regulators moved to block the AT&T deal, Verizon Wireless was buying big chunks of spectrum from the nation’s largest cable carriers and signing agreements with them to sell each other’s services to consumers around the country. The deals could have the positive effect of putting to use spectrum that cable companies bought at auction in 2006, and encouraging Verizon to roll out new high-tech wireless services. But the potential for these agreements to curtail competition in both wireless and wireline industries is troubling, and should be examined by the Justice Department and the FCC. Verizon’s cable deals squashed hopes that cable carriers’ purchases of wireless spectrum would lead to more competition against the dominant players, AT&T and Verizon Wireless. And it puts in doubt whether FiOS will ever be a serious competitor to cable, reducing the likelihood that video transmitted over broadband could break up cable’s regional oligopolies. Verizon’s deals suggest a future in which cable carriers will get uncontested control of high-speed broadband into the home while AT&T and Verizon will get uncontested control over wireless. For consumers with expensive wireless plans, pricey bundles of cable channels and costly, slow broadband, this does not look like good news. (Dec 24)