Justice holds up Verizon’s bid for cable spectrum

The Justice Department is holding up approval of Verizon Wireless’s $3.9 billion bid for spectrum from cable firms because of concerns that a cross-marketing deal between the companies that could thwart competition to provide cable and Internet service, according to people familiar with the review.

Last year, Verizon agreed to bundle its wireless service with the cable, Internet and traditional phone subscriptions offered by Comcast, Time Warner, Bright House Networks and Cox Communications — in what would replace the “triple play” packages popular among consumers.

Justice’s concern is that Verizon, in its eagerness to boost cellular customers, would then play down its FiOS service, which provides high-speed Internet, cable and land-line service and directly competes with traditional cable.

FiOS is available to 14 million U.S. homes, and regulators see it as an important alternative for consumers. If that business declines, many families may be left with just one or two options in many markets, analysts say.

Justice may force concessions by Verizon and the cable firms on the marketing portion of their agreement, analysts say.

That raised some concern by Justice officials who fear the increased coziness of Verizon, the nation’s biggest wireless firm, with its former rivals in traditional cable. Some observers wonder if the alliance could edge out firms who provide cellular service or who are trying to make forays into providing Web-based television such as Apple, Google and Netflix.

Verizon Wireless and cable firms won favor from the Federal Communications Commission for the spectrum purchase after agreeing to sell off a swath of airwaves to T-Mobile USA, the nation’s fourth largest wireless carrier, according to people familiar with the review. But the FCC is closely coordinating with Justice and supports any decision it may make on the marketing portion of the deal, according to a person close to the review, who spoke on condition of anonymity because the matter is not closed.

The FCC has an informal target of mid-August to finish its review.

“We believe we have made a persuasive case as to why these deals should be approved, and that the sale and agreements are in the public and consumers’ interests. We expect approval later this summer,” said Verizon spokesman Ed McFadden.

Verizon Communications and Britain’s Vodafone jointly own Verizon Wireless.

Cecilia Kang is a staff writer covering the business of media and entertainment.
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