Policy

DOJ Approves SpectrumCo Deal

8/16/2012 11:56 AM Eastern

A quartet of cable operators received approval from the U.S. Department of Justice on its $3.9 billion sale of wireless spectrum to Verizon Wireless, but not without a few concessions.

Comcast, Time Warner Cable and Bright House Networks agreed in December to sell their 122 Advanced Wireless Spectrum licenses -- held in a separate entity called SpectrumCo -- to Verizon, a deal that also included a landmark co-marketing agreement between the cable operators and the wireless giant, for $3.6 billion.

Separately, Cox Communications also agreed to sell its AWS spectrum to Verizon for $325 million.

The licenses, first purchased by SpectrumCo for $2.4 billion in the federal AWS auctions in 2006, cover 259 million people across the country.

That part of the deal was the source of some concern from competitors many of whom filed objections to the deal after it was announced.

Among the concessions made: Verizon has agreed not to sell cable products in markets where Verizon Communications' FiOS TV product also is sold and it would lose its ability to resell cable services in areas where Verizon sells digital subscriber line service in 2016, subject to renewal.

In addition, cable companies would be able to resell wireless services from Verizon competitors after five years, at which time they may also partner with other wireless service providers.

Verizon has also agreed to form a technology research and development joint venture with the cable operators.

The co-marketing efforts have primarily centered around offering pre-paid Visa cards with a bundle of cable and wireless services. So far, Comcast has launched joint offers with Verizon Wireless in 21 states -- Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Missouri, Michigan, Minnesota, Mississippi, New Mexico, Oregon, South Carolina, Tennessee, Utah and Washington.

Time Warner Cable has focused its initial co-marketing efforts on eight states: Maine, Nebraska, Alabama, Kansas, North Carolina, Ohio, South Carolina and Wisconsin.

Cox has launched offerings in Oklahoma City and Tulsa, Okla.

In a statement, Acting Assistant Attorney General in charge of the DOJ's antitrust division Joseph Wayland said the conditions "provided the right remedy for competition and consumers."

The Federal Communications Commission also is expected to approve the deal. Earlier today, FCC chairman Julius Genachowski recommended the commission approve the transaction based on the DOJ consent decree.

"Because of these substantial undertakings and in light of the Consent Decree the companies executed with the Justice Department today, I believe the Commission should now approve this transaction, and I will be circulating a draft order to my colleagues that would do so," Genachowski said in a statement.

Comcast, which owns the largest portion of SpectrumCo at 63.5%, was obviously pleased with the approval.

"We appreciate the timely completion of the antitrust review by the government of the proposed sale of spectrum and associated commercial agreements between Verizon Wireless, Comcast, and the other cable companies, Comcast executive vice president David Cohen said in a statement on a Comcast blog. "And, we are pleased that the consent decree that we have negotiated with the Department of Justice preserves the most important goals of the agreements, including Comcast's ability to market Verizon Wireless services throughout our footprint in order to offer our customers a wireless option, Verizon Wireless' ability to market our products in virtually all of our footprint, our ability to opt into an MVNO relationship with Verizon Wireless, and the essential structure of the innovation R&D technology joint venture. We are also pleased that the FCC is circulating an order proposing approval of the spectrum sale and we are hopeful that a final order will be issued shortly."

November