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Delay sought in Verizon, cable AWS deal

Thu, 02/09/2012 - 4:39pm
Maisie Ramsay, Wireless Week

DirecTV, T-Mobile USA and Sprint want the FCC to stop the clock on its review of Verizon Wireless' $4 billion deal to buy a nationwide chunk of AWS spectrum from four cable companies.

They want Verizon to disclose more information about a side deal with the cable operators to market and sell each other's products. Verizon has provided some details about the arrangement but has reportedly redacted specifics about "pricing, compensation and related provisions."

"As a result of the incomplete submissions by the applicants, neither the Commission nor interested parties have an adequate basis upon which to assess the public interest implications of the proposed transactions," the companies wrote yesterday in a letter to the FCC. The request was also signed by the Rural Telecommunications Group and the Rural Cellular Association.

The note has not yet been posted to the FCC's online docket and was provided to Wireless Week by public interest group Public Knowledge.

The missive was prompted by a Feb. 7 request from Public Knowledge and three other organizations that also demanded the FCC halt its review until more information was known about the marketing side deal.

"The Commission should suspend both the pleading cycle in this proceeding and the informal 180-day "transaction clock" and reset them to zero once the applicants have provided full disclosure of their arrangements," they wrote.

Verizon could not be reached for comment but argued last month that the marketing deals "have no bearing on whether the spectrum sale is in the public interest, do not require Commission approval and, for several reasons, do not need to be part of the formal record in this proceeding."

Despite their objections, Verizon and the cable operators agreed to hand over some documents "to avoid undue delay." The information has so far been kept out of the public record.

DirecTV, Sprint, C Spire Wireless, T-Mobile and a number of public interest groups said the side deal should be included in the FCC's review because the spectrum sale "appears to be only one small part of what could be a significant realignment of the competitive landscape in these industries."

The deal has been met with some pushback on Capitol Hill. Wisconsin Democrat Herb Kohl says the Senate antitrust committee he chairs plans to hold a hearing on the transaction, and Minnesota Democrat Sen. Al Franken has asked the FCC and Justice Department to investigate the companies' marketing arrangements.

Verizon is paying $3.6 billion for 122 AWS licenses from Comcast, Time Warner Cable and Bright House Networks and has inked a separate deal with Cox Communications to buy its AWS holdings for $315 million.

The deal goes beyond the spectrum sale, however. As part of the transaction, the companies agreed to cross-selling arrangements and formed a joint venture aimed at creating new products that integrate wireless and wireline services.

The companies aren't waiting for FCC approval on the side deal. Verizon Wireless and Comcast have already set up shop in Portland, Seattle and the San Francisco Bay area, where they're selling each other's products and services. Earlier this month, Verizon Wireless said customers who signed up for one of its smartphone plans and Comcast's Xfinity service would be eligible for $300 back in the form of a prepaid debit card.

The cable operators originally teamed up to buy the spectrum for $2.4 billion during the FCC's 2006 auction. The airwaves laid fallow, except for Cox's short-lived effort to build its own wireless network.

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