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Competitors Worry About Cozy Verizon, Cable Deal
As FCC and DOJ Begin Taking Look at Antitrust Issues
by Karl Bode 12:45PM Friday Jan 20 2012
Consumer advocates remain worried that Verizon's co-marketing partnership and spectrum deal with the cable industry contains either a documented or undocumented "gentlemen's agreement" that Verizon will limit future expansion of FiOS to prohibit more intense landline broadband competition. As we discussed, that would mean that the company's already stalled FiOS upgrades would remain that way as a courtesy, in exchange for being able to sell LTE service to millions of new cable customers.

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T-Mobile, Sprint and DirecTV are also worried about the competitive impacts of the deal, and are urging the FCC to take a closer look. Verizon and Comcast have voluntarily provided some additional detail on the deals in a new FCC filing, though the majority of what was disclosed is private to the public, and there's certainly no guarantee a non-compete agreement was even put in print.

As they have in every instance where regulators have tried to actually regulate, Verizon is arguing the FCC lacks the authority to do anything about the marketing arrangements should the FCC find something they don't like in the deals:
quote:
Verizon Wireless and its partners argued that commercial agreements do not need FCC approval and "have no bearing on whether the spectrum sale is in the public interest" so they do not need to be part of the FCC review...The partners also told the FCC that the spectrum license agreement and the commercial agreements "are not contingent upon each other" so either could go ahead even if the other were not approved, according to the filing.
As we've noted the Verizon cable deal is of particular concern of smaller telcos like Windstream, CenturyLink, Frontier and Fairpoint. Such companies already lack the funds to seriously upgrade their networks to compete with faster cable speeds, and now have to deal with Verizon LTE services that in some instances offer faster speeds than these telcos' landline services. There's an added layer of insult for Frontier and Fairpoint since Verizon convinced them to gobble up unwanted Verizon networks and debt -- only to now face Verizon returning to these markets to erode those customer bases.

The combined marketing muscle of Verizon and Comcast (or Time Warner Cable) would likely erode already weak competition in many of these more-rural markets. Unfortunately, regulators have shown time and time again that they're perfectly ok with uncompetitive landline markets, so it seems unlikely that Verizon and their new cable BFFs have much of anything to worry about from a regulatory angle.

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DataRiker
Premium
join:2002-05-19
00000

What, Duopolies not good enough?

We need virtual monopolies!
openbox9
Premium
join:2004-01-26
Germany
kudos:2

Re: What, Duopolies not good enough?

What does this change that makes it a "virtual monopoly" instead of a "duopoly"?
Sammer

join:2005-12-22
Canonsburg, PA

Re: What, Duopolies not good enough?

said by openbox9:

What does this change that makes it a "virtual monopoly" instead of a "duopoly"?

Verizon received local FiOS TV franchises as well as breaks at the state level based on the promise the public would benefit from them competing with cable TV. Now Verizon is in bed with cable so yes it is a very real problem. Nothing that Verizon is doing may be technically illegal but their ethics under their current CEO stinks.
openbox9
Premium
join:2004-01-26
Germany
kudos:2

Re: What, Duopolies not good enough?

Come on. VZ invested billions of dollars into local economies based on those promises too. I honestly don't see how this changes the landscape much.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: What, Duopolies not good enough?

said by openbox9:

Come on. VZ invested billions of dollars into local economies based on those promises too. I honestly don't see how this changes the landscape much.

Yes and you had significant difficulty understanding how the FCC's conditional approval of Lightsquared's business plan was a legitimate and properly conducted regulatory procedure.

Everyone but you can see that this agreement will completely eliminate any chance of FIOS expansion and cause prices to rise across the nation. Verizon didn't invest *their own* money into these markets. They invested their duopoly profits, garnished from the subscriptions of their captive subscriber base, back into the markets, after siphoning off huge profits for executive bonuses.

baineschile
2600 ways to live
Premium
join:2008-05-10
Sterling Heights, MI
We should all protest and move to Korea.

DataRiker
Premium
join:2002-05-19
00000

Re: What, Duopolies not good enough?

South Korea I hope you mean. Its a lovely country with low taxes and even cheaper health care.

People there are generally happy.

Prim

@comcast.net

Re: What, Duopolies not good enough?

South Korea also heavily censors their internet too. Its extremely Catholic / Christian country and censors movies, games, and publications it deems too harsh for the conservative sentiments of the country.

»en.wikipedia.org/wiki/Censorship···th_Korea

DataRiker
Premium
join:2002-05-19
00000

4 edits

Re: What, Duopolies not good enough?

said by Prim :

South Korea also heavily censors their internet too. Its extremely Catholic / Christian country and censors movies, games, and publications it deems too harsh for the conservative sentiments of the country.

»en.wikipedia.org/wiki/Censorship···th_Korea

In theory yes. In practice, its like anywhere in Asia. There are more porn / sex shops than I have ever seen in the US. It is so prevalent that I suspect this is why the conservatives passed this legislation.

There was a "love shop" aka sex/porn shop within spitting distance to the middle school I taught at. Can you Imagine that in the US?

Also, none of the ISP's I used censored porn or any websites ( or any English content for that matter )

In actuality, SK is way more open than anything I've seen in the US with regards to sexual attitudes but this is common in Asia. Take a walk at night in Suwon and you will see what I mean very quickly.

As far as other censoring I can't speak too as my Korean is just not good enough.

EvelKub
Kitty is crazy
Premium
join:2002-03-17
Mesa, AZ

Faster speeds?

Actually, Verizon LTE gives me faster speeds (specifically upload) than my CABLE internet connection...

ArrayList
netbus developer
Premium
join:2005-03-19
Evanston, IL

1 edit

Re: Faster speeds?

I STAND CORRECTED
majortom1029

join:2006-10-19
Lindenhurst, NY
kudos:1

Re: Faster speeds?

said by ArrayList:

article is about Verizon, not Verizon Wireless.

Verizon owns a big chunk of verizon wireless

Pathfinder
Dazed Confused
Premium
join:2000-03-26
Mount Vernon, NY
Reviews:
·Verizon FiOS
said by ArrayList:

article is about Verizon, not Verizon Wireless.

If you read the quote in the article it specifically names Verizon Wireless and LTE is Verizon Wireless.

miataman

join:2010-10-27
Chelmsford, MA
kudos:1
Reviews:
·Verizon FiOS

Re: Faster speeds?

said by Pathfinder:

said by ArrayList:

article is about Verizon, not Verizon Wireless.

If you read the quote in the article it specifically names Verizon Wireless and LTE is Verizon Wireless.

If there's one thing I remember from my time at VZ, it was the constant talk about :when are we going to "buy out" Vodaphone's 45% interest in Wireless. It WILL happen someday.
--
"My hat, my cane, Jeeves".

skuv

@rr.com
But the article is implying that Verizon is colluding with cable companies over Verizon Wireless' deal with cable companies to resell LTE.

So the article is about both.

nothonest

@sbc.com

Fairpoint and Frontier...

may very well be incompetent boobs, but they are far from 9 year old children that were convinced to go snipe hunting. Their lack of ability to compete in the future lies squarely at the the feet of Frontier and Fairpoint management.

huh

@comcast.net

curious

Yes Verizon is majority owner of Verizon Wireless, but aren't they still different businesses?

cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7

Re: curious

said by huh :

Yes Verizon is majority owner of Verizon Wireless, but aren't they still different businesses?

CeLLCo Partnership d/b/a Verizon Wireless is a joint partnership between Verizon Communications (55%) and Vodafone (45%). While the partnership may be separate legal entity, profits are funneled back up to Verizon Communications and booked on the parent company's income statements.

So to answer your question, no, they are more like a parent/subsidiary (although subsidiary may not be the official legal definition).
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:2

Re: curious

Not to mention that VZW (the US portion) was built entirely with profits earned by Verizon Communications... they were never anything but a subsidiary of Verizon.
openbox9
Premium
join:2004-01-26
Germany
kudos:2
For the time being. Don't think for a second that VZ doesn't want to be a full owner (much like when AT&T bought out Bellsouth).

Sr Tech
Premium
join:2003-01-19
Valhalla, NY
kudos:1

How I see it

Comcast (which has all franchise agreements) provides TV services, and Verizon will provide the data and infrastructure. If both of these companies were to merge their networks it would be a savings for both companies, but I do see massive layoffs on both sides. Not sure about how the pricing would be affected once they monopolize an area.

newview
Ex .. Ex .. Exactly
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Parsonsburg, MD
kudos:1
Reviews:
·DIRECTV
·Comcast

Re: How I see it

said by Sr Tech:

Not sure about how the pricing would be affected once they monopolize an area.

History has shown that when Comcast monopolizes an area, pricing is generally lower & some special offerings are only applicable in those areas. A Verizon / Comcast deal would only further those agendas.

PapaMidnight

join:2009-01-13
Baltimore, MD

1 recommendation

Err...

Just to play devil's advocate, Hasn't been AT&T been doing this for the better part of a decade now with DirecTV (following the SBC / Cingular deal)? Why is it suddenly a problem?

wesm
Premium
join:1999-07-29
Redmond, WA
Reviews:
·Frontier FiOS

So...

This explains why Frontier has gone back to advertising FiOS TV: they're stuck with the FiOS network--especially since Verizon moved regulated POTS over to it in the Pacific Northwest before bailing--so they might as well get as much bang for the buck as possible. Customers are increasingly disinterested in land line service, and in the leafy, hilly PNW getting satellite service can be a pain in the hindquarters. If Frontier can get people locked into 2-year contracts for double- and triple-play bundles, that decreases the per-subscriber cost for the network and helps pay down its debt.

Part of me wonders if Comcast didn't begin its roll-out of this new partnership in Washington and Oregon precisely because company managers knew Frontier would be weak competition.
rifleman69

join:2006-04-12
Beaverton, OR

Re: So...

said by wesm:

Part of me wonders if Comcast didn't begin its roll-out of this new partnership in Washington and Oregon precisely because company managers knew Frontier would be weak competition.

BINGO!

wesm
Premium
join:1999-07-29
Redmond, WA
Reviews:
·Frontier FiOS

Re: So...

said by rifleman69:

BINGO!

Weak or not, Frontier still isn't Comcast, so I'll be a subscriber... At least Frontier hasn't shown its desire to be like Comcast; we still have no caps, and far better upload speeds than any residential plan from Comcast.

BooVerizon

@optonline.net
Frontier can't afford the content for the Fios networks they got from verizon. Ex: HBO costs too much for them (Frontier) to provide it for there subscribers

wesm
Premium
join:1999-07-29
Redmond, WA
Reviews:
·Frontier FiOS

Re: So...

said by BooVerizon :

Frontier can't afford the content for the Fios networks they got from verizon. Ex: HBO costs too much for them (Frontier) to provide it for there subscribers

I'm not sure what you mean, considering that HBO (channel 899) is currently active for my CableCARDs and Frontier gave it to me for free two days ago...

mikedz4

join:2003-04-14
Weirton, WV
Reviews:
·Frontier Communi..
·Verizon Online DSL
·Comcast

knew this would happen

When frontier bought verizon's properties I had a feeling verizon would wait for frontier to not be able to upgrade them then come back to the public service commisions wanting to buy those areas back up for pennies on the dollar.
It's like the kid that sells the baseball card for $20 then a year later after it isn't worth anything comes and gets it for $1 when he knows the person is going to have a breakout year. Thus reaping a $19 profit.

FFH
Premium
join:2002-03-03
Tavistock NJ
kudos:5

If agreement done over round of golf; no one will prove it

If this is an undocumented agreement done by CEOs over a round of golf, the FCC will never be able to prove a thing. Who is to say whether Verizon has halted Fios expansion as part of a deal with Comcast or for 1 of a dozen other reasons. Especially since the deal was done AFTER Verizon already halted expansion. Ultimately it will be up to Verizon's CEO whether Fios expansion goes forward or not and why he makes that decision will ONLY really be known to him. He can give other reasons to satisfy his Board of Directors that I am sure they would buy.

As for Comcast, selling off the spectrum leases to Verizon are easily justified as a way of disposing of assets it no longer intends on using and getting paid for them.
--
The nine most terrifying words in the English language are, I'm from the government and I'm here to help.
»www.politico.com/2012-election/

axus

join:2001-06-18
Washington, DC
Reviews:
·Comcast

You can force a company to NOT do something, but...

You shouldn't force them to spend money except for safety/privacy standards. If Verizon doesn't want to expand FIOS, why should they? In theory, it leaves room for a competitor to do what they won't.

How about some municipal broadband on fiber? UTOPIA isn't making money yet, but they are providing a lot of good services to businesses in Utah.
BiggA

join:2005-11-23
EARTH

FIOS was already dead

The dumb shareholders killed it. Plus, most of Comcast's footprint doesn't overlap with Verizon's. AT&T is much bigger than Verizon, and we all know that they don't care about competing with Comcast on the TV side.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

frontier, fairpoint footprint

What is likely to happen is Verizon might not get to lay down (LTE) wireless footprint in former Frontier / Fairpiont footprint.. since much of this deal puts the much of Appalaica mountainous eastern states in a virtual monopoly on par with Qwest(now Century [old]Tel). This is the CONSEQUENCE for killing FIOS deployment and shuting billions of $$ in debt to worthless companies-- also supporting monopolization of the wireless industry with a scheme by which AT&T acquires Tmobile.

Some way, some how this is all leading to USAGE BASED BILLING and INTERNET CENSORSHIP.. slowly tick, by tick... underhanded shareholder backed scheme by scheme.. The time has well past when some of these municiaplites need to funde FTTP projects of their own and tell the corrupt politicans to go scratch their ass with a broken bottle.

Cyrus

@ucsc.edu

Is this the future?......you can cancel the future

So now what? Does the future of the internet mean that we will have to deal with a even greater push for mobile such that land lines will be completely eliminated and therefore be forced to use mobile as our primary way to connect to the web and therefore be subjugated with limited bandwidth and low caps with huge overages because they can?
25139889

join:2011-10-25
Toledo, OH

Sprint

I knew from the headline before clicking on the article that Sprint was behind this. They should have put their iPhone cash behind their own brand and actually compete instead of spending it on the iPhone crazy and behind all these lawsuits.

A waste of money. Time for Sprint to find a new CEO.

88615298
Premium
join:2004-07-28
West Tenness

What's the problem with the deal?

As far as selling the spectrum there shouldn't be an issue. Cable is squatting on it not using it and Verizon needs spectrum. I'd rather Verizon buy spectrum from companies not using the spectrum they have than the FCC take away OTA TV spectrum and give it to Verizon. Because in the end those are your choices.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

nickled, dimed and jacked

Verizon is beginning to pass on new surcharges for digital voice & cable-tv so watch your bills... trickling higher to the point you'll actually do something about it (like cancel these services).

AT&T and Verizon wireless are heading down a duopoly road which will put them on a collision course with the FCC/DOJ. Just a matter of time before the regulatory hammer comes crashing down. A quid-quo-pro system in which Verizon exploits customers the cable companies don't want anyway (wireless) is a win-win-lose(you guessed it, the customers) game that Comcast and AT&T have been playing in wireline for the better part of a decade!