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Posted at 02:58 PM ET, 12/08/2011

Verizon ends satellite deal, FiOS expansion as it partners with cable


Consumer Electronics Association President and Chief Executive Gary Shapiro, left, greets Verizon Communications Inc. Chairman and Chief Executive Ivan Seidenberg, right, and President and Chief Operating Officer Lowell McAdam during the Consumer Electronics Show in Las Vegas in January. (By Julie Jacobson - Associated Press)
Updated from previous version:

Verizon Chief Executive Lowell McAdam said the telecom giant plans to end its wireless LTE partnership with satellite provider DirectTV and will stop its buildout of FiOS television and Internet services in the next couple years.

The moves come as Verizon Wireless forges a new partnership with cable giants to cross-market phone, video, Internet and cellular services.

The comments, made at a UBS Global Media and Communications Conference in New York on Wednesday, signal massive shifts in the industry that have raised concerns with antitrust regulators, according to a person familiar with the thinking of government officials.

In Q&A session at the UBS conference, McAdam said the wireless firm dismissed those concerns. He said the firm has begun discussions with officials at the Federal Communications Commission about its $3.6 billion deal to buy spectrum from Comcast, Bright House and Time Warner Cable.

He said the spectrum they will buy isn’t being used and fits well with the FCC’s strategy to use airwaves that are being “warehoused” by firms.

“This takes spectrum that had no plans to be put into commercial service. . . . We will make that commercial in the near term,” McAdam said. “That will spur initial investment and jobs and that is a very good story.”

But antitrust experts and industry analysts say more significant than the spectrum sale is the cross-marketing partnership struck by Verizon and cable firms.

Bernstein analyst Craig Moffett said the end of its partnership with DirectTV for a trial LTE service is “the first direct fall-out from Verizon’s ground-breaking deal” with cable companies.

And even though McAdam insisted that Verizon will rigorously promote its FiOS video and Internet service in areas that compete with cable, the company said it doesn’t have plans to expand the expensive fiber network beyond what’s already been announced and scheduled for buildout over the next couple years.

Related:

FCC deals blow to AT&T, T-Mobile merger

Looming threat for Netflix: charging consumers for data use

By  |  02:58 PM ET, 12/08/2011

 
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