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Background: Today, the DoJ announced that it will allow, with conditions, Verizon and a group of cable companies to cross-market each other’s products and establish a Joint Operating Entity to develop and control new technology. Verizon will also acquire large blocks of wireless spectrum formerly held by the cable companies. The FCC is also expected to approve the deal next week with similar conditions.
The following statement can be attributed to Gigi B. Sohn, President & CEO of Public Knowledge:
By allowing Verizon and the cable companies to sell each other's services, the DoJ and the FCC are acknowledging what has been clear for some time--that broadband competition policy in the United States has failed. For years, policymakers have hoped that "facilities-based" competition between wired broadband providers would protect consumers, drive down prices, and encourage new deployment. It is clear that this promise has not been fulfilled.
Instead, Verizon has stopped deploying fiber, and will be marketing cable broadband instead of its own services in non-fiber markets. Nationwide, cable has opened up an unsurpassable lead over DSL. Meanwhile, the wireless broadband market has become a near-duopoly, as AT&T and Verizon acquire more and more spectrum, leaving all other competitors behind.
The proposed conditions on this transaction attempt to alleviate some of the harms that will arise from a lack of competition, and policymakers deserve credit for trying to make the best of a bad deal. However, it is not enough for the anti-competitive cross-selling agreement to be limited in time or scope--it should not happen at all. Similarly, the proposed conditions that attempt to diminish the anticompetitive impact of Verizon and the cable companies’ Joint Operating Entity do not hide the fact that the JOE is a vehicle that empowers former competitors to suppress new rivals. When and if Verizon and the cable companies seek permission to continue the JOE in four years the FCC and DoJ must seriously examine how the companies have used the JOE to stifle competition.
Policymakers can no longer pretend that the broadband market is competitive. Congress and the FCC should pursue new policies to stimulate competition in wireline internet access service--or resign themselves to regulating a broadband monopoly.