Pros and Cons of the Verizon Wireless – SpectrumCo/Cox Deal

Parties filed comments and petitions to deny the proposed Verizon Wireless purchase of cable spectrum assets held by SpectrumCo (Comcast, Time Warner and Bright House Networks) and Cox on February 21, 2012. Although the FCC was not inundated with thousands of furious consumer comments a la AT&T/T-Mobile (yet anyway), this $3.6b deal is certainly not skating by unopposed.

Some strong opposition comes from seemingly unlikely sources, including AT&T/T-Mobile champion union Communications Workers of America and AT&T target T-Mobile. Expected opposition from the Rural Telecommunications Group (RTG), Sprint, Public Knowledge and Free Press outlines why the deal is anticompetitive and not in the public interest. As RTG expressed, this deal “trumpets the dawn of a new era in America – the oligopolistic cartel of Big Cable + the Twin Bells.” Fear of excessive market power is a clearly a theme carried over from the AT&T/T-Mobile deal. The Verizon/SpectrumCo deal has the potential to create “an unprecedented level of market power” in the quad-play arena, and “could hinder video and broadband competition, resulting in higher cable rates, less network investment and fewer jobs,” according to the Communications Workers of America and International Brotherhood of Electrical Workers (CWA/IBEW). Despite many familiar and predictable negative sentiments about mega-deals, the comments reveal some interesting positions both for and against these uncharted waters in cross-platform consolidation. Comments generally focused on the pros and cons of 1) the spectrum transfer and 2) the applicants’ Commercial Agreement.