Bloomberg News

T-Mobile Asks FCC to Block Verizon Cable Airwaves Purchase

February 24, 2012

(Updates with hearing set in ninth paragraph.)

Feb. 22 (Bloomberg) -- Verizon Wireless, the largest U.S. mobile provider, should be prevented by federal regulators from buying airwaves from cable companies to avoid “excessive concentration” of spectrum, T-Mobile USA Inc. said.

Two airwaves purchases totaling more than $3 billion proposed by Verizon “pose a clear threat to competition,” T- Mobile, the fourth-biggest U.S. wireless carrier, said in a filing yesterday to the Federal Communications Commission.

The purchases would keep smaller competitors from using the airwaves for advanced services, according to Bellevue, Washington-based T-Mobile, which AT&T Inc. unsuccessfully tried to buy last year.

Verizon proposed in December acquiring airwaves for $3.6 billion from top U.S. cable operator Comcast Corp., No. 2 Time Warner and Bright House Networks LLC, and announced a separate $315 million spectrum purchase from Cox Communications Inc. Under the transactions, Verizon and the cable companies are to market and sell each other’s services.

Ed McFadden, a Verizon spokesman, said in an e-mailed statement today that “the spectrum purchase is in the public interest, and will address the needs of all consumers, putting spectrum to work to meet growing demand.”

Sprint Nextel Corp., the third-largest U.S. mobile phone provider, and leading U.S. satellite TV company DirecTV asked the FCC to examine the marketing arrangements. The agreements create “strong incentives for what had been fierce rivals to collaborate rather than compete,” El Segundo, California-based DirecTV said in a filing.

Unused Airwaves

Regulators will probably approve the transaction, partly because it promises to bring unused airwaves into service, Paul Gallant, a Washington-based analyst with Guggenheim Partners, said in a note today.

“We still give the edge to Verizon,” he said in the note.

The deals face a March 21 hearing before the Senate’s antitrust subcommittee, the panel said in an e-mail today. The Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights committee said the session will be entitled, “The Verizon/Cable Deals: Harmless Collaboration or a Threat to Competition and Consumers?” The subcommittee’s chairman, Wisconsin Democratic Senator Herb Kohl, will preside.

Verizon, based in Basking Ridge, New Jersey, wants to add airwaves as customers increasingly adopt smartphones such as Apple Inc.’s iPhone to watch video and browse the Web. Verizon Wireless is owned by Verizon Communications Inc. and Newbury, England-based Vodafone Group Plc.

FCC, Justice Opposition

AT&T, the second-largest U.S. wireless operator, abandoned its proposed acquisition of T-Mobile in December amid opposition from the FCC and Justice Department.

The FCC should block the deals because they would give more airwaves to the largest carrier, and raise “serious concern” that the companies will collude, nine public policy groups led by Public Knowledge said in a filing, according to an e-mail from the Washington-based organization.

MetroPCS Communications Inc., which provides wireless service in areas where Verizon proposes to add spectrum, asked the FCC in a filing to deny the application because it lacks “certain critical information.”

Verizon needs to provide detailed information for each market where it wants to add airwaves, and the cable companies must demonstrate they had intended to provide service on the spectrum, MetroPCS said.

--Editors: Steve Walsh, Michael Shepard

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net


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