Verizon, Comcast, and the Patent Wars
Verizon, Comcast, and the Patent Wars
Verizon, Comcast, and the Patent Wars

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    As the Federal Communications Commission (FCC) and Department of
    Justice (DOJ) continue their review of the proposed deals between
    Verizon, Comcast, and several other large cable companies, attention
    is turning to the companies’ side agreements tied to the proposed
    spectrum transfer
    From the very beginning of this proceeding Public Knowledge has
    focused on the ways that the side agreements threaten the public
    , in
    addition to potentially spelling the end of competition between wireline and
    wireless internet service providers.

    For example, Verizon, Comcast, and the other cable companies have
    jointly created a new company called the Joint Operating Entity (JOE),
    which the companies will use to develop technology that integrates
    wireline and wireless service.
    Of course, for these companies, developing new technology will go
    hand-in-hand with obtaining new patents. As a result, the JOE could
    have a monopoly over foundational technologies for the next
    generation of internet access service.

    This means that Verizon and Comcast in particular would have a new,
    particularly powerful weapon in the escalating patent wars that already cost tech companies obscene amounts of money in
    litigation costs and stand in the way of actual innovation.
    Given the scope of the JOE’s stated purpose, its patents could likely
    reach other companies’ efforts to come up with new offerings that deliver online video, voice, and data services.

    The idea of these companies potentially controlling the patents that
    could effectively become the standard for the next generation of
    internet access service is even more worrisome when you actually read
    the details of the agreements, which have been submitted to the FCC
    under confidentiality protections. More than two months ago Public
    Knowledge challenged the companies’ confidentiality claims over parts of
    the agreements that don’t qualify for confidentiality protections but
    are still hidden from the public, but the FCC has not yet ruled on our

    But even without being able to go into details on all of the ways the
    agreements, we can still broadly discuss how we can stop these
    agreements from stifling innovation and anointing a new communications
    cartel that would have enormous leverage against its competitors. The
    real answer that is that no combination of conditions on these deals
    can really prevent the public interest harms they would likely create,
    but there are some conditions that could somewhat lessen the public
    interest harms.

    First, one of the more obvious tools that could help rein in the
    damage that will be caused by the JOE and its patent war chest is a condition that the JOE must license its technologies to other
    companies on reasonable and non-discriminatory terms (RAND terms).
    This could potentially prevent the JOE from withholding its
    technologies from other companies that are willing to reasonably
    license the patents, bundling the important technology with patents
    the licensees don’t actually want, restricting licensees’ deals with
    competitors, and requiring licenses to the other company’s patents as
    payment. It would also stop the JOE from discriminating against
    certain companies trying to license the JOE’s patents.

    Of course, the JOE is just one (especially bad) part of the web of
    deals between these companies, which also include a spectrum transfer,
    joint marketing agreements, and wireless reseller agreements. This
    means that any package of conditions that even comes close to
    addressing the many public interest harms threatened by this deal
    would need to include conditions like spectrum divestitures, strong
    spectrum build-out requirements, a “use it or share it” condition on
    the transferred spectrum, limits on joint marketing deals where the
    companies currently compete on wireline service, and conditions that
    ensure Verizon could not try to prevent the cable companies from
    partnering with others to offer new services that rely on WiFi offload

    These agreements are extraordinarily complex, deeply interconnected,
    and pose serious threats to competing companies and consumers. As they
    review these deals, the FCC and DOJ should stay strong to protect
    consumers from the many anticompetitive threats of these deals.