Under the deal announced Friday, Verizon will pay $3.6 billion to Comcast, Time Warner and Bright House Networks to use a swath of cellphone airwaves that the cable giants own but do not use. That would cement Verizon’s status as the dominant wireless carrier and give it access to valuable spectrum at a time when its primary rival — AT&T — is struggling to expand its network through a controversial proposed merger with T-Mobile.
But perhaps the most extraordinary aspect of the deal is its cooperative marketing arrangement, which calls for the cable companies and Verizon to “become agents to sell one another’s products.”
That would allow, for example, a consumer to walk into a Comcast store and get a Verizon Wireless plan tacked on to his television, Internet and landline phone service. Eventually, Verizon’s name might not appear on those bundled plans, the firms said.
The cable companies would essentially kill plans to move into the cellular industry. Meanwhile, Verizon would promote the cable companies even where it offers its fledgling cable and home Internet service known as FiOS.
This part of the agreement is “a complete reordering of the competitive universe as we know it today,” said Bernstein Research analyst Craig Moffett. It “amounts to a partnership between formerly mortal enemies, not just outside of Verizon’s FiOS territories, but even within them.”
While consumers could eventually see their cable TV, Internet, home phone and cellphone services on a single monthly bill, some antitrust experts are worried about deal. They are especially concerned that Verizon — in its push to dominate wireless services and its new obligation to promote other cable companies — will lose interest in FiOS altogether. That business has about 14 percent of U.S. households, but it has been expensive to build.
The deal will go before regulators at the Department of Justice and the Federal Communications Commission for review.
“A flag is raised when two rival networks move to start selling each other’s services,” said a person familiar with the concerns of federal antitrust officials. “They lose their desire, impetus, to compete. That is a big antitrust flag.”
These companies and their direct rivals are all competing in the same space: providing high-speed Internet in the home and on the go. At the same time, a host of other giants including Google, Apple, Netflix and Facebook are eating away at their core services, allowing users to place phone calls, send text messages and watch streaming videos for free or a la carte via the Internet.