DoJ approves Verizon/Comcast deal – with changes

The Department of Justice has approved Verizon’s planned $3.9 billion acquisition of spectrum from Comcast, subject to conditions designed to safeguard competition.

It says it’ll allow the deal – as well as T-Mobile USA’s subsequent purchase of a chunk of the same spectrum – to go ahead, on the grounds that it will benefit consumers. The deal was opposed by some mobile operators.

Verizon agreed to acquire the spectrum in December last year, and this June agreed to transfer a significant portion of it to T-Mobile – the smallest of the US’ four national operators – in a move which seweetened the deal for the DoJ.

But the companies are to be forced to make changes, aimed at protecting competition. Notably, the DoJ has been concerned that agreements between Verizon and cable companies would have required Verizon Wireless to sell the cable companies’ services on an ‘equivalent basis’ with FiOS, making it harder for Verizon to sell its own services.

The settlement, therefore, bars Verizon from selling cable company products in FiOS areas and removes the restrictions on its ability to sell FiOS. 

It also places a time limit – December 2016 – on a proposed deal whereby Verizon will resell cable companies’ services to customers in areas where Verizon sells DSL Internet service.  It also places time limits on a proposed technology joint ventured.

“By limiting the scope and duration of the commercial agreements among Verizon and the cable companies while at the same time allowing Verizon and T-Mobile to proceed with their spectrum acquisitions, the department has provided the right remedy for competition and consumers,” says Joseph Wayland, acting assistant attorney general in charge of the Department of Justice’s Antitrust Division.

“The Antitrust Division’s enforcement action ensures that robust competition between Verizon and the cable companies continues now and in the future as technological change alters the telecommunications landscape.”

The FCC still has to approve the deal, but is expected to do so in the near future. Chairman Julius Genachowski says he’s in favor of the deal.

“Approval of the substantially modified transaction will promote the public interest and benefit consumers in several ways. By advancing US leadership in 4G LTE deployment, the transaction marks another step in our effort to promote the US innovation economy and make state-of-the-art broadband available to more people in more places,” he says. 

“The transaction will preserve incentives for deployment and spur innovation while guarding against anti-competitive conduct.  And vitally, it will put approximately 20 megahertz of prime spectrum — spectrum that has gone unused for too long — quickly to work across the country, benefiting consumers and the marketplace.”