In a letter to the Justice Department and Federal Communications Commission, Sen. Herb Kohl (D-Wis.) didn’t oppose the deal outright, but he said any approvals should come with Verizon’s willingness to sell off some spectrum in certain markets to prevent it from being too dominant.
He also said he has “real concerns” over the joint marketing deal struck by Verizon Wireless and cable companies. He said the deal may prevent Verizon Communications from putting as much marketing energy behind the paid TV service FiOs, which competes with cable television. Consumers, as a result, could suffer from higher prices and less competition. See this CNN story on how Verizon is doing away with DSL services).
“There is a real concern these agreements transform Verizon and the cable companies from fierce competitors into business partners because they lessen the incentive for Verizon and cable companies to compete aggressively against the other, particularly in the markets where Verizon has deployed FiOs,” Kohl wrote.
Kohl’s letter is significant, analysts say, and could offer a road map for regulators.
“Chairman Kohl’s letter is a noteworthy marker, as his letters in other recent telecom/media transactions have been accurate predictors of agency decisions,” said Paul Gallant, an analyst at Guggenheim research.
Kohl recommended Comcast’s joint venture with NBCU be approved only with extensive conditions. He recommended that DOJ and FCC reject AT&T’s bid for T-Mobile. The regulators’ decision aligned with those recommendations.
Verizon took Kohl’s letter as a sign that regulators and lawmakers are on track with their reviews, despite a regulatory delay weeks ago.
“Because these transactions present unique issues that will deliver major consumer benefits, it is appropriate for Senator Kohl to carefully examine the issues that are also being studied by the appropriate agencies,” said Verizon Executive Vice President Tom Tauke. “While Senator Kohl’s letter recounts the arguments reviewed at the Senate hearing, it is another indication that this transaction is on the road toward approval this summer.”