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Kohl asks DOJ, FCC to 'carefully scrutinize' Verizon AWS deal

Fri, 05/25/2012 - 12:10pm
Maisie Ramsay, Wireless Week

The same senator that asked the FCC and Justice Department to block AT&T's merger with T-Mobile USA is now asking the agencies to "carefully scrutinize" Verizon's AWS spectrum purchase and marketing deals with four cable companies.

Herb Kohl, chairman of the Senate antitrust committee, sent a letter to DOJ Attorney General Eric Holder and FCC Chief Julius Genachowski yesterday asking the officials to closely examine the potential competitive effects of the transactions.

“Your agencies made the correct decision to preserve competition by your courageous decision last year to take action to block the AT&T/T-Mobile merger,” Kohl said. “We must be especially vigilant this year to ensure that this transaction does not jeopardize a competitive wireless market for consumers that your agencies recently worked so hard to preserve.”

The 77-year-old Wisconsin Democrat, set to retire at the end of his current term, stopped short of calling on an outright block on the deals.

However, his eight-page letter contained a litany of concerns about consolidation of spectrum and whether the deals amounted to a "truce" between Verizon FiOS and the AWS cable partners, which are competitors in the landline business. The letter echoed concerns Kohl expressed during a March Senate hearing on the transactions.

"There is considerable precedent for the Justice Department to take action under antitrust law to prevent a dominant firm from gaining access to essential inputs needed by a rival to compete. The Justice Department should carefully scrutinize this transaction to determine if this precedent mandates action," Kohl said. "Further, I urge the FCC to examine the competitive consequences of this transaction without being unduly limited by a mechanical application of its spectrum screen."

Verizon attempted to put a positive spin on Kohl's letter, releasing a statement titled "Verizon: Kohl letter another step toward approval."

"Because these transactions present unique issues that will deliver major consumer benefits, it is appropriate for Senator Kohl to carefully examine the issues that are also being studied by the appropriate agencies," Tom Tauke, Verizon’s executive vice president of public affairs, policy and communications, said in the response. “While Senator Kohl’s letter recounts the arguments reviewed at the Senate hearing, it is another indication that this transaction is on the road toward approval this summer.”

Verizon’s bid to acquire nationwide AWS spectrum from Cox Communications, Time Warner Cable, Comcast and Bright House Networks has attracted opposition from consumer groups and competitors that allege the transaction will harm competition by giving Verizon too much control over scarce spectrum resources.

Verizon says it needs the additional licenses to add capacity to its LTE network, which currently runs on its 700 MHz holdings.

Verizon forged a cross-marketing deal with its cable partners at the same time it signed off on the AWS sale. The agreement allows the companies to sell each other’s products and services. Verizon has already kicked off cross-selling with Comcast, Cox and Time Warner in several markets.

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