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DOJ, FCC concerns are delaying Verizon AWS deal

Fri, 07/13/2012 - 2:52pm
Maisie Ramsay, Wireless Week

The Justice Department and the FCC aren't looking kindly upon Verizon Wireless' marketing agreements with its cable partners in the AWS transaction, according to the latest report from The Wall Street Journal.

The federal antitrust regulator is said to be delaying approval of the spectrum purchase because of concerns that side deals to cross-sell each other's products amount to a non-compete agreement.

The FCC also has similar concerns it wants addressed before it clears the deal, sources familiar with the matter told Wireless Week.

A DOJ spokesman declined to comment on the report, saying only that its review of the transaction was ongoing. A FCC spokesman declined to provide specifics, saying only that the "the FCC and DOJ are closely coordinating."

The concern that the marketing initiatives will quell competition in the cable market has been expressed by a number of other parties, including a number of House Democrats and a member of the Senate Judiciary Committee.

Verizon has repeatedly said the agreements between its wireless business and the cable companies will not affect its willingness to compete on its wireline side, where it operates its FiOS service.

"We are confident that we have made a persuasive case that it is strongly in the public interest to bring used spectrum to millions of consumers," a Verizon spokesman said. "We expect the approval process to successfully conclude sometime later this summer."

Verizon announced last summer it was paying $3.9 billion to buy a significant amount of AWS spectrum from Cox Communications, Time Warner Cable, Comcast and Bright House Networks. The spectrum will be used to add capacity to Verizon's LTE network, which runs on the 700 MHz band. Verizon says it could run into capacity constraints in some markets as early as next year without the additional licenses.

The marketing deals were agreed to at the same time as the spectrum sale, but Verizon has maintained that they are separate transactions. The agreements allow the five companies to sell each other's products in retail stores, and they have also formed a joint venture to make products integrating wireless and wireline services.

Verizon and three of the cable companies have moved forward with cross-selling in some markets, despite the fact that the government's review is still pending. Bright House Networks is currently the only party involved in the transaction that has not started offering Verizon's wireless products in its stores.

Verizon has taken a number of steps to encourage the government to clear the deal. It has offered to sell off its lower 700 MHz A- and B-block licenses and swap spectrum with T-Mobile USA if it receives approval for the transaction. It will take the offers off of the table if its AWS acquisition falls through.

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