WASHINGTON (AP) — The Justice Department announced Thursday it will order changes to protect consumers in deals between Verizon and four of the nation's largest cable companies.
If left unchanged, the department said, the agreements would harm competition by reducing incentives to compete — resulting in higher prices and lower quality for the public.
Late last year, Verizon Wireless announced deals to buy spectrum from Comcast Corp., Time Warner Cable Inc., Bright House Networks and Cox Communications. The deals call for the companies to market each other's products in their stores.
The Justice Department said it will limit the scope and duration of the agreements. While the government will allow Verizon's proposed acquisition of spectrum from the cable companies to go forward, it said the acquisition will be contingent on the purchase of a significant portion of that spectrum by a competitor, T-Mobile USA.
The government's announcement followed a coordinated investigation with the Federal Communications Commission and assistance from the New York state attorney general's office.
The transactions remain subject to review by the FCC.
FCC chairman Julius Genachowski said Verizon Wireless has undertaken "an unprecedented divestiture of spectrum to one of its competitors, T-Mobile" and is committed to accelerating expansion of its new spectrum. He said modifying the companies' commercial agreements will preserve Verizon's incentives to expand its FiOS cable service and increase wireless competition.
Verizon and the cable companies are longtime competitors. The cable companies bought the spectrum they now want to sell Verizon with loose plans to start a wireless company or form a joint venture with one. Those plans never came to fruition. Cox had started setting up its own wireless service but gave up, saying it would be too small to compete against the big cellphone companies.
The spectrum sale puts cable companies out of the wireless business, where Verizon is dominant.
Critics of the deals have said they will also reduce competition in the cable business, where Verizon has FIOS. The cross-marketing has already started in some areas, with Verizon Wireless stores selling Comcast cable service and Comcast stores touting Verizon cellphone plans.
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