Public Interest Groups Ask FCC To Block Verizon Deals With Cable Companies

The Federal Communications Commission (FCC) should not allow Verizon to enter into a complex series of transactions with the country's largest cable companies, nine public-interest groups, led by Public Knowledge, said Tuesday.

In the filing, the groups said that Verizon's arrangements to buy spectrum from Comcast, Time Warner Cable and Bright House, with a separate deal for Cox, would "would fundamentally alter the nature of the telecommunications world in a manner utterly contrary to that intended by the 1996 Telecommunications Act."

The groups on the filing are: Public Knowledge, Media Access Project, the New America Foundation Open Technology Initiative, Benton Foundation,1 Access Humboldt, Center for Rural Strategies, Future of Music Coalition, National Consumer Law Center, on behalf of its low-income clients, and Writers Guild of America, West

A copy of the filing is here.

Under the deals, Verizon, the largest wireless company, would gain even more spectrum, "aggravating existing anticompetitive problems with spectrum aggregation," the filing said.  In addition, under related agreements, Verizon agreed to sell the video services of the cable companies.  Those side agreements "give rise to serious concern that not only will these providers decline to compete further with one another, they will actively collude with one another," the groups said. 

Verizon and the cable companies also agreed to set up a "Joint Operating Entity" to develop new technologies to link voice, video and wireless traffic.  The technology that could result would be a new industry standard controlled by companies that control approximately 40% of the wireless market, 40% of the residential broadband markets, and 40% of the residential video market  and have sizable program holdings through Comcast's ownership of NBCU.

"To 'supersize' Verizon Wireless with additional spectrum from Comcast, Time Warner Cable, Bright House, and Cox so that the largest wireless operator can better promote the services of the largest incumbent cable operators directly undermines the pro-competitive policies of the 1996 Act and is thus contrary to the public interest," the groups said.

An additional factor is the secrecy under which the deals have been presented to the FCC, the groups said, arguing, "And where, as here, the Applicants have refused to make complete copies of pertinent documents available in the record—even under the strictest confidentiality—alarm bells should ring with deafening insistence."

The side operating agreements can't be fixed and should be denied by the Commission, the groups said, arguing that the public does  "not even have access to the full text of the contracts between the parties, and because, in any event, the gravest threat could come down the road, as the companies modify the scope of their cooperation."

The spectrum sale should similarly be turned down, but if the FCC decides to grant it, there should be requirements that Verizon allow data roaming on its network and that the FCC impose requirements that Verizon build out its spectrum or make the spectrum available on secondary markets.

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