Policy

Spectrum Deal Scrutiny Continues

4/30/2012 12:01 AM Eastern

Washington — As of press time, the Federal Communications
Commission was still vetting Verizon Wireless’s proposed
purchase of spectrum and co-marketing agreements
with leading U.S. cable operators, and both the buyer and sellers
last week saying that was definitely the way to go.

Top Democrats in the House of Representatives, meanwhile,
urged a hearing on the proposed transaction. And the Federal
Communications Commission approved a separate transfer
of advanced wireless spectrum to a major wireless player.

The FCC has been asked by the Communications Workers
of America and other deal critics to delay the review of Verizon
Wireless’s purchase of spectrum from the cable companies,
citing delays in receiving documents from the deal applicants,
including problems with opening computer files.

TECHNICAL ISSUES

The cable companies and the wireless firm responded that had
there been any problems, they were on the CWA’s end.

On April 24, Bright House Networks, Verizon Wireless, Comcast,
Cox TMI Wireless, the SpectrumCo consortium and Time
Warner Cable claimed in a collective response to the FCC that
the union’s claims were meritless.

For one thing, the companies
said, the files CWA could not open
were in formats — shapefiles and
tables — specifi cally requested by
the FCC and for which there were
free viewers available for CWA to
use.

“Verizon Wireless has additionally
responded to numerous questions
from CWA’s counsel to help
them understand the files,” the
company wrote. “CWA’s inability
to open the files is not the result
of any defect in Verizon Wireless’
production.”

Comcast said it produced information
in PDF format the day after the union requested it, then
in a second format the day after the CWA asked for it in a different
format. Time Warner Cable says it provided documents
within three business days, but CWA never picked up the documents
and apologized for not doing so.

“In sum, the facts do not support CWA’s allegations,” the
companies said to the FCC. “In the few instances where CWA
was delayed in accessing any of the productions, the cause lies
with CWA, not with the applicants. Plainly, CWA has provided
no basis for stopping the transaction clock or in any way delaying
the FCC’s review of this transaction.”

SpectrumCo is a consortium owned by Comcast (63.6%),
Time Warner Cable (31.2%) and Bright House Networks (5.3%).
It bought the spectrum in the FCC’s 2006 advanced wireless
services (AWS) auction along with Sprint Nextel, which was
bought out by the other consortium members in 2007. Cox left
the consortium in 2009, taking its spectrum with it.

Verizon has agreed to pay $3.6 billion for the SpectrumCo
holdings and $325 million for Cox’s spectrum, subject to FCC
approval.

There are also associated marketing agreements through
which Verizon and the cable operators will sell each other’s
services. A separate agreement would create a research-anddevelopment
technology center to develop ways to integrate
wired and wireless service.

In addition to ongoing reviews by the FCC and Justice Department,
Congress has gotten involved. The Senate held
a hearing last month, and last week top House Democrats
sought similar vetting.

In a letter to the Republican chairmen of their respective
committees, Reps. Henry Waxman and Anna Eshoo, both California
Democrats, said they were not taking a position on the
deal, but did raise some concerns that they said should be addressed
in a hearing.

They cited the avowed plan of Rep. Greg Walden (R-Ore.),
the communications subcommittee chairman, for his panel
to engage in a “close review” of spectrum issues this session.
Walden told reporters early this year that was a priority for the
committee — and said that no such examination would be
complete without a look at the Verizon deal, which the FCC
is currently vetting.

Eshoo and Waxman said they had not taken a position on
the deal, but argued it was important to hear testimony and
consider the policy implications of the transaction, which
Verizon says will free up unused spectrum for the benefit of
consumers and critics say will increase concentration and decrease
competition among cable and wireless companies.

Representatives for House Energy and Commerce Committee
Republicans had not returned a request for comment at
press time on whether or not they would hold a hearing.

The FCC has found one way of getting wireless spectrum out
of the hands of one of the two biggest players: deny a merger.

T-Mobile said last week
that the FCC had signed off on
AT&T’s transfer of AWS spectrum
in 12 of the top 20 markets
to the company as part of
the multibillion-dollar breakup
fee AT&T had to pony up
after the government blocked
AT&T’s purchase of T-Mobile
and its spectrum.

“We applaud the FCC for
acting swiftly to approve
the transfer of these spectrum
licenses,” Neville Ray,
chief technology officer
at T-Mobile USA, said in a
statement.

SPECTRUM DEAL MILESTONES

Dec. 2, 2011: SpectrumCo agrees to sell
122 Advanced Wireless Services spectrum
licenses covering 259 million people
in the U.S. to Verizon Wireless for $3.6
billion. The companies also sign pacts to
let the MSOs and Verizon Wireless sell
one another’s products. SpectrumCo paid
$2.37 billion for 137 AWS licenses in
2006 in an FCC auction. SpectrumCo is
owned by Comcast (63.6%), Time Warner
Cable (31.2%) and Bright House (5.3%).
Cox Communications, a former Spectrum-
Co participant, strikes a separate deal to
sell spectrum to Verizon Wireless.


Jan. 19, 2012:
Consumer groups and
wireless competitors urge the Federal
Communications Commission to look
beyond Verizon Wireless’s planned
purchase of spectrum from cable
operators to a series of related deals
and relationships among them. Public
Knowledge, Sprint, T-Mobile and others
underline the cooperative aspects of
the transaction, between “actual and
potential competitors.”


March 21, 2012:
Cable operators’
deal to sell AWS spectrum to Verizon
gets a thorough going-over in a Senate
Antitrust Subcommittee hearing. Comcast
and Verizon executives defend the
deal as adding value for consumers,
while opponents paint pictures of cable
monopolies and wireless duopolies calling
a “truce” on competition.

September