Verizon's cable deals make headway but regulatory doubts linger

Sources say the Federal Communications Commission is prepared to approve Verizon’s purchase of spectrum from cable companies. But Verizon is in much tougher talks with the Justice Department in hopes of winning agreement for two other much-criticized portions of the deal.

The Justice Department is skeptical about the marketing deals since they would mean collaboration between Verizon, the largest wireless company, and Comcast, the biggest cable company, according to one of the sources. The fear is that there will be less head-to-head competition which could mean higher Internet and wireless plan prices. The hope had been that Verizon would use its FiOS service to more aggressively push into Internet and cable, and that Comcast and other companies would compete more heavily in wireless products. The other concerning component, the source said, is the creation of a "joint operating entity" between Verizon and the cable companies. It is designed to develop new technologies, such as one that would allow consumers to move seamlessly between wired and wireless hookups, but critics say it could create cutting-edge technologies only available to the consortium. "The Justice Department has big concerns about what mischief could be done in undefined agreements that would lock out competitors," said the source. Talks are underway between the department and the parties, with no decision expected until August at the earliest. The Justice Department is weighing three options - it could sue to stop the side arrangements to the spectrum buys, it could seek to change them to prevent potential collusion, or it could monitor how the cross-marketing agreements that have already been put in place play out. Neither agency will sign off on the transactions until both are satisfied that any problems have been resolved.