Justice probing Verizon over cable deals

December 20, 2011

The Justice Department on Tuesday confirmed that it is investigating Verizon Wireless’s airwaves and marketing deal with cable companies for any anti-competitive effects it may have on the telecommunications industry.

Verizon’s recent $3.6 billion purchase of wireless spectrum from Comcast, Time Warner and Bright House Networks would give the nation’s biggest wireless carrier an edge over competitors as the industry races to bolster networks for a deluge of smartphones and tablets.

The agreement also includes a marketing deal in which Verizon and the cable companies would cross-promote products.

Gina Talamona, a Justice spokeswoman, confirmed that antitrust officials are reviewing the transaction. Verizon on Monday submitted an application to the Federal Communications Commission to approve its spectrum purchase.

Verizon Communications spokesman Ed McFadden declined to comment, saying the company had not received information about the investigation. Comcast has argued that competition won’t decrease because no wireless companies are being removed from the market.

But Justice officials say the deal presents multiple concerns — particularly as the communications and tech markets converge and battle lines are blurred, a person familiar with the review said.

They are worried about the cross-marketing deal that was announced in conjunction with the spectrum purchase. They want to ensure that Verizon wouldn’t give up on its television and Internet landline business known as FiOS, which has been a cable alternative for 14 million U.S. homes.

“There is a concern that this creates too cushy a relationship between companies that had been competing,” said a person familiar with the review who spoke on the condition of anonymity because the probe is not public.

As the communications industry transforms, antitrust officials want to ensure that Verizon, for example, would offer new services such as online streaming television to compete with cable providers, the person said.

Analysts said the reviews by Justice and the FCC are perfunctory and were expected, given the size of the transaction.

Cecilia Kang is a national technology reporter, writing about tech and Internet policies at the Federal Communications Commission and Federal Trade Commission and how regulations affect businesses and consumers.
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