The U.S Department of Justice on Thursday cleared the $3.9 billion deal by Verizon Wireless, a joint venture of Verizon Communications (VZ: Quote) and Vodafone Plc (VOD: Quote,VOD.L), to buy spectrum from cable operators including Comcast Corp. (CMCSA: Quote,CMCSK: Quote), but with some conditions to protect competition. The department also said it would allow Verizon's deal to sell a significant portion of that spectrum to smaller rival T-Mobile USA, a unit of Germany's Deutsche Telekom AG (DTEGY.PK), to go forward.
In a statement, the department asked Verizon and four other cable companies —Comcast, Time Warner Cable Inc. (TWC: Quote), and privately held Bright House Networks LLC and Cox Communications Inc. - to make some changes in deals concerning the sale of bundled wireless and wireline services as well as the formation of a technology research joint venture.
According to the department, if left unaltered, the agreements would have harmed competition by diminishing the companies' incentive to compete, resulting in higher prices and lower quality for consumers, it noted.
The announcement follows an investigation by the Federal Communications Commission or FCC, with additional assistance provided by the New York State Attorney General's Office. The transactions remain subject to review by the FCC.
It was in December last year that SpectrumCo, LLC, a joint venture between cable operators Comcast, Time Warner Cable, and Bright House agreed to sell advanced wireless spectrum for $3.6 billion. Cox separately agreed to sell its 20 MHz Advanced Wireless Services or AWS spectrum licenses for $315 million. These companies also entered into a series of commercial agreements to sell each other's products and create an exclusive technology research joint venture.
In June 2012, Verizon Wireless agreed to transfer a significant amount of that spectrum to T-Mobile USA, and also announced a public process to sell other previously unused spectrum.
In its statement, the Department noted that these spectrum is unused currently.
The department noted that the Antitrust Division filed a civil antitrust lawsuit on Thursday in the U.S. District Court for the District of Columbia to prevent these cable operators from enforcing their commercial agreements. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the concerns alleged in the lawsuit.
According to the Department, the proposed settlement would, among others, remove provisions that would lessen the companies' incentives to compete aggressively in the areas where Verizon's FiOS services offer a critical competitive alternative to the cable companies' video and broadband products.
The settlement also limits the duration of the companies' collaboration to December 2016 in important respects, ensuring that they retain incentives to compete against one another. It forbids Verizon Wireless from selling cable company products in FiOS areas and removes contractual restrictions on Verizon Wireless's ability to sell FiOS.
Under the settlement, Verizon and the cable companies would also be required to provide regular reports to the department to make sure that the collaboration does not harm competition going forward.
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by RTT Staff Writer
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