The U.S. Justice Department allowed the sale of unused airwaves from Comcast and other cable companies to Verizon Wireless Thursday.
Originally announced in December of last year, regulators raised anti-competitive concerns over the unprecedented purchase, specifically because it would allow Verizon and cable companies to cross-sell services. The rationale: If they were permitted to do so, then they would be able to drive up prices and drive out the competition for services. To calm those concerns, heavy restrictions on the deal prevent the companies from selling each other’s services in FiOS markets.
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“A rigorous review by the Federal Communications Commission and Department of Justice staffs revealed that the deal as proposed by Verizon Wireless and the cable company owners of SpectrumCo posed serious concerns, including in the wired and wireless broadband and video marketplaces,” FCC Chairman Julius Genachowski said in a statement.
“In response to the agencies’ objections, the parties have made a number of binding pro-competitive commitments and will also make fundamental changes to their agreements. Because of these substantial undertakings and in light of the Consent Decree the companies executed with the Justice Department today, I believe the Commission should now approve this transaction, and I will be circulating a draft order to my colleagues that would do so.”
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The $3.6 billion deal still needs final approval from the FCC; however, it is expected to approve the deal in the coming weeks.
Verizon has plans to cover 70% of the United States over the next seven years with the newly acquired frequencies and has agreed to allow other carriers roaming coverage using the spectrum.
Despite the restrictions on the deal many are still not convinced that the restrictions are enough.
Public Knowledge, a Washington, D.C.-based public interest group dedicated to “defending consumer rights in the emerging digital culture,” has released a statement on the matter, specifically commenting that the conditions of the deal are not enough to protect competition.
“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, Gigi B. Sohn, President & CEO of Public Knowledge said in a statement.
“For years, policymakers have hoped that 'facilities-based' competition between wired broadband providers would protect consumers, drive down prices, and encourage new deployment.”
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.”
What do you think of the DOJ approving the deal? Is it a good or bad thing for consumers? Let us know your thoughts in the comments.
This story originally published on Mashable here.