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FCC ensures Verizon’s Comcast deal is better for competitive marketplace
17 August 2012
Analyst Jeff Kagan welcomes the rules imposed by the FCC on Verizon Wireless’s acquisition of spectrum from Comcast and other cable operators. Let’s hope it is enough, he says: something is going on with Verizon and Comcast
Jeff Kagan: Without this new agreement, the way Comcast and
Verizon Wireless were doing business together was simply not
Verizon Wireless customers line up in Texas as the company
releases its version of the iPhone 4
Congratulations to Verizon Wireless on the acquisition of US wireless spectrum from cable television companies Comcast, Time Warner, Cox and Bright House Networks.
Over the last few months I have written about this, highlighting some of the many areas of concern. Most of them seem to be addressed in this new agreement [with the US Federal Communications Commission]. That’s good.
But like President Ronald Reagan once said, “trust but verify”. That sounds good here as well. The companies agreed to some important changes to settle anti-trust and anti-competitive concerns when things started getting bogged down in the approval process.
In order to get this deal closed, the cable television companies agreed to limit the scope and duration of various agreements to sell each other’s services.
It seems what Verizon and the cable companies such as Comcast have said to the FCC was enough to let the regulators OK the acquisition.
Verizon Wireless needs spectrum. Portions of its network were about to be affected by slowdowns and blocked traffic. Then again every other carrier also faces the same pressures.
Without this new agreement, the way Comcast and Verizon Wireless were doing business together was simply not competitive. They were no longer competing with each other: they were becoming partners rather than competitors with services such as telephone, television and internet.
The unanswered question really is: what is going on between Verizon, Verizon Wireless and the cable television industry? That is the question that has many scratching their head.
I understand the companies agreed to limit the duration of joint ventures to less than five years. Then they have to apply once again for anti-trust clearance to continue.
Verizon and Comcast have agreed not to implement their current joint marketing agreement in areas where they compete for telephone, television and internet. That’s a partial solution. What that means is when you walk into a Verizon Wireless store you won’t see Comcast Xfinity for sale in the places where Verizon offers FiOS.
Why these two competitors are partnering is the long-term question. Something doesn’t seem right about this at this point.
We want to make sure Verizon continues to roll out FiOS. The original agreement limited that. This new agreement seems to make sure that will continue.
Real competition is what keeps innovation high and prices low. Let’s hope real competition will continue.
The reason the cable television companies are selling this spectrum to Verizon Wireless is because they failed to make them work. They tried first with Sprint Nextel and then with Verizon Wireless, but had no success. The problem was their lack of understanding of how to position the service and how to advertise and market it against big name competitors such as AT&T and Verizon.
What will happen in the future is the question. It sounds like the FCC will set up several other conditions on this deal as well. One of them will include Verizon Wireless offering data roaming to competitors are reasonable rates. Another is that Verizon Wireless must use this spectrum in the next few years. That should be no problem, but it’s good to have it as a condition just to make sure.
The original deal submitted to the FCC for approval was full of holes. It was not good for the competitive marketplace. This deal makes much more sense. Does it go far enough is the question? We’ll see.
The partnering of two arch-competitive enemies like Verizon and Comcast still raises questions. We should keep our radar up. Something is up with them.
The original deal as proposed made no sense for anyone other than Verizon and Comcast. The competitive marketplace — meaning investors, customers and competitors — would take a hit. This deal sounds better. Let’s hope it is enough. GTB
Jeff Kagan is a technology analyst based in Atlanta, Georgia, US
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