Broadband Cable Association of Pennsylvania

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May 1, 2012

Verizon Wireless may have to give up some of the valuable spectrum it is hoping to acquire from a group of cable operators to win regulatory approval for the proposed $3.6 billion deal, The Post has learned.

The wireless giant, facing a tough antitrust review by Washington regulators, will likely have to make concessions, including selling a chunk of the spectrum or forgoing a piece altogether so it won't lesser consumer choice in the marketplace, sources said. Allowing Verizon, the No. 1 wireless carrier, to buy all the licenses will make it tough - if not impossible - for much smaller rival T-Mobile to build out its 4G network, sources said.

In December, another wireless rival, AT&T, dropped its deal to buy T-Mobile when regulators challenged it, at least in part because they argued that there needed to be a strong third cellular alternative. "The regulators will not want to appear to be treating Verizon any better than AT&T," the source said. A spokesman for Verizon declined to comment. But a source familiar with the company's thinking downplayed comparisons with AT&T's situation, saying Verizon is buying unused spectrum rather than trying to win approval for a merger.

Both the Federal Communications Commission and the Department of Justice are scrutinizing Verizon's deal struck in December to buy spectrum from Comcast and its cable partners. As part of the deal, Verizon and Comcast, along with Time Warner Cable and Bright House Networks, struck a marketing pact under which they agreed to promote each other's products.

The FCC is at least two months away from making a recommendation, while the DOJ is even earlier in its inquiry, sources said. The DOJ and FCC declined to comment. The DOJ represents a bigger threat to Verizon Wireless, led by Dan Mead, because it has the chance to look beyond competition issues and judge if the marketing agreement is in the public interest. The cross-selling pact means the cable operators, for instance, could resell Verizon's mobile service as part of their package deals. Some skeptics say the pact reduce competition. New York Post

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