By Diane Bartz
WASHINGTON Aug 2 Verizon Wireless may need to
agree to tough conditions to win approval for its deals to buy
spectrum from cable companies and market each others' products,
according to three sources knowledgeable about the negotiations.
The Justice Department and Federal Communications Commission
are reviewing plans by Verizon Wireless, the biggest U.S. mobile
provider, to buy spectrum from a consortium of cable providers,
including Comcast (CMCSA.O) and Time Warner Cable TWC.N, for
about $3.9 billion. The transactions were proposed in December.
While the Justice Department and FCC appear prepared to
approve the spectrum portion of the deals with minor
adjustments, antitrust regulators have sought strict limits on
controversial side deals.
The additional spectrum would give Verizon Wireless a bigger
edge over competitors as they struggle to meet consumer demand
for videos and other data-heavy services. Verizon Wireless is
owned by Verizon Communications (VZ.N) and Vodafone Group Plc
Negotiations with the Justice Department's Antitrust
Division have been bruising, focusing on plans by Verizon
Wireless and Comcast, the biggest mobile carrier and the biggest
cable company, respectively, to market each other's products.
There has also been concern about a plan for a joint venture
to develop new technologies, such as one to allow consumers to
move seamlessly between wired and wireless hookups. Critics say
it could create cutting-edge products only available to the
The path that the talks are on would lead to a consent
decree that would forbid the cross marketing agreement where
Verizon markets its FiOS product, according to the three
sources, who were not authorized to speak on the record.
Cross marketing in the rest of Verizon's footprint and the
joint research and development project would be allowed but only
for a limited period of time, the sources said.
Verizon has 18 million households with FiOS in California,
Connecticut, Delaware, Florida, Indiana, Maryland,
Massachusetts, New Hampshire, New Jersey, New York, Oregon,
Pennsylvania, Rhode Island, Texas, Virginia and Washington.
The companies would like to see negotiations wind up in
August, which is possible, two sources said.
The proposed remedies are "strong measures that indicate DOJ
(the Justice Department) had significant concerns about the
anticompetitive potential of key features of the proposed
agreement," said an antitrust expert who declined to be named to
protect business relationships.
A Justice Department spokeswoman declined to comment on the
current transactions under review, as did a Verizon spokesman.
The FCC, which should conclude its review this month, also
Consumer advocates had hoped that Verizon would use its FiOS
service to more aggressively push into Internet and cable, and
that Comcast and other companies would compete more heavily in
The FCC, which is taking the lead in assessing the spectrum
portion of the deal, is prepared to approve it with some
adjustments following promises of spectrum sales, according to
two sources familiar with the matter.
Last month, Verizon and Deutsche Telekom's (DTEGn.DE)
T-Mobile USA said they would swap some spectrum in a deal that
paved the way for T-Mobile to drop its objection to Verizon's
deals with the cable companies.
Neither agency will sign off on the transactions until both
are satisfied that any problems have been resolved.
The regulatory review of Verizon's spectrum deal comes a few
months after the Justice Department and FCC turned back AT&T's
bid to buy rival T-Mobile USA. Regulators said a merger between
the second- and fourth-largest U.S. cellphone companies would
hurt competition and raise prices for consumers.
(Reporting By Diane Bartz)
((Diane.Bartz@thomsonreuters.com)(1 202 898 8313))
Keywords: SPECTRUM VERIZON/ANTITRUST
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