Verizon/SpectrumCo: What’s the Deal?
Verizon/SpectrumCo: What’s the Deal?
Verizon/SpectrumCo: What’s the Deal?

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    The largest wireless service provider, Verizon, and the
    largest cable companies (Cox, and SpectrumCo, which is made up of Comcast, Time
    Warner Cable, and Bright House) have proposed a series of transactions that
    will harm consumers, inhibit competition, and stifle technological innovation. The
    transactions would move spectrum away from the cable
    companies and to Verizon, already the largest wireless provider. But that’s not
    the worst of it —the companies are also proposing to divide the market and not
    to compete with each other by exclusively marketing each other’s products and
    jointly developing new technologies. Essentially, Verizon and AT&T get
    wireless; cable gets wireline; and consumers get nothing.

    sorts of cease-fire agreements—cartels, essentially—will leave customers
    unprotected from the whims of a few large companies by denying them the
    benefits of a fully competitive and fair marketplace.

    That’s why Public Knowledge joined forces with Media
    Access Project, New America Foundation Open Technology Initiative, Benton
    Foundation, 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 to protect the public interest in a healthy
    communications marketplace by asking the Federal Communications Commission
    (FCC) to block the

    are the nuts and bolts of what’s going on and why you should be concerned:

    Why transfer

    The cable companies bought this spectrum a few years ago
    but haven’t been able to put it to good use. 
    So they’ve decided to give up trying to compete with Verizon and sell it
    the spectrum instead. 

    Why is the
    spectrum transfer bad?

    The spectrum transfer is contrary to the public interest
    because it will not effectively promote wireless competition.  The largest wireless service provider in the
    country will get even more spectrum, and Cox, Comcast, Time Warner Cable, and
    Bright House will have surrendered their ability to enter the market as competitors.  

    Competition, on the other hand, benefits the public by
    lowering prices and offering more options, technological innovations, and
    better services. 

    What are the other

    In addition to SpectrumCo’s potential license transfer to
    Verizon, the companies want to enter into various agreements if the FCC permits
    the license transfer. 

    First, there are agency agreements where Verizon and
    SpectrumCo will be the exclusive resellers of each other’s products. 

    Second, there are joint operating entity agreements where
    Verizon and SpectrumCo will exclusively control any new technologies that stem
    from their joint venture. 

    Why are these
    agreements bad?

    The agency agreements are bad for competition because Verizon
    and SpectrumCo are agreeing not to compete with each other and essentially
    dividing the wireless and cable markets between each other.  A customer in a Verizon store to buy a cell
    phone plan could also walk out with a new Comcast cable subscription.  This will make it difficult for other market
    participants to compete with Verizon and SpectrumCo companies and could
    increase prices for consumers. 

    The joint operating entity agreements are bad because
    Verizon and SpectrumCo will likely not license their new technologies to
    competing service providers.  Without the
    ability to build on existing technology, service providers will have a hard
    time competing and consumers will have fewer options when choosing technological
    devices in the future.

    Why must the FCC
    review the proposed spectrum transfer and accompanying agreements?

    As explained above, the spectrum transfer, agency
    agreements, and joint operating entity agreements are all bad for independent
    reasons, but together, they are that much worse.  It is essential that the FCC defends the
    public interest as companies want to consolidate and integrate their
    services.  Companies cannot transfer
    spectrum licenses without the FCC’s consent and the FCC also has the authority
    to look at agreements that coincide with the proposed transfer. 

    Although the FCC can fix the most egregious harms posed
    by a spectrum transfer or contractual agreement, remedies will not work
    here.  We don’t even have access to most
    of the contents of the agreements, and anyway, the greatest threats may come
    down the road when the companies modify their agreements.

    The bottom line? 

    If the FCC allows these transactions to go forward, the
    companies will find collusion easier than ever, and consumers will pay the