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FCC Wonders About Verizon's Spectrum Crunch Math
Digging Deeply Into New Cable Industry Deal
by Karl Bode 04:34PM Friday Mar 09 2012
In December Verizon, Time Warner Cable, Comcast and Bright House announced a massive deal that not only involved the sale of $3.6 billion in cable industry spectrum to Verizon, but also gave the telco the right to bundle their wireless service with the cable triple play. It's an interesting deal that, taken alongside Verizon's new residential LTE service, poses some interesting problems for both satellite broadband providers and smaller telcos. oth competitors and consumer groups have for months expressed concern that the deal includes numerous anti-competitive provisions.

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In order to get the deal approved, Verizon recently trotted out the reliable old capacity crisis bogeyman, despite repeatedly stating previously they have plenty of spectrum for LTE deployment. Verizon claims that if the deal isn't approved they may run out of spectrum by 2015, but failed to back up this claim with, well, any actual numbers whatsoever.

The FCC has been looking into the deal's impacts, and this week requested information from several companies in terms of the deal. In particular, a letter from the FCC to Verizon (pdf) shows concern about how Verizon came to their predicted spectrum shortfall:
quote:
Explain these statements in detail, including identifiing all markets in which additional spectrum would be needed prior to 2015, which spectrum bands Verizon Wireless presently is using in those markets, and the requisite timeframes for meeting these spectrum needs. Describe assumptions and methodology....Provide all documents that address whether Verizon Wireless already has sufficient spectrum to meet its capacity needs until 2015.
This is a fairly massive deal that poses significant competitive problems for smaller wireless carriers, rural DSL providers, and satellite broadband companies. To get the whole deal approved, Verizon and Comcast have been arguing that the spectrum sale and marketing arrangements are fused, something the FCC so far appears to not be buying. While it seems likely the complete deal will be approved, it's nice to see the FCC at least ask Verizon for proof the spectrum bogeyman exists.

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88615298
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West Tenness

FCC talking out it's ass

OK so the FCC is saying Verizon's "spectrum crunch" claims are bogus yet they want to take away spectrum from OTA which will be sold to at& and Verizon because of a "spectrum crunch" these companies are facing. Does this make sense?

dvd536
as Mr. Pink as they come
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Phoenix, AZ
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Re: FCC talking out it's ass

said by 88615298:

OK so the FCC is saying Verizon's "spectrum crunch" claims are bogus yet they want to take away spectrum from OTA which will be sold to at& and Verizon because of a "spectrum crunch" these companies are facing. Does this make sense?

How about they use what they're squatting on?

FFH
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Tavistock NJ
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Verizon just has to repeat FCC claims of spectrum crunch

The FCC has been beating the spectrum shortage drum themselves for over a year now. It shouldn't take much effort by Verizon to convince the FCC on what they already believe. The FCC put out numbers themselves on how rapidly the growth of wireless data will overload existing wireless inventory. Now all Verizon has to do is feed it back to them.

The only issue will be are there any secret quid-pro-quos between the cable companies and Verizon to dispel. The marketing and sharing deals aren't secret. So I don't see where those consumer advocate groups will get very far with that angle.
--
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»www.politico.com/2012-election/

Chubbysumo

join:2009-12-01
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Re: Verizon just has to repeat FCC claims of spectrum crunch

said by FFH:

The FCC has been beating the spectrum shortage drum themselves for over a year now. It shouldn't take much effort by Verizon to convince the FCC on what they already believe. The FCC put out numbers themselves on how rapidly the growth of wireless data will overload existing wireless inventory. Now all Verizon has to do is feed it back to them.

The only issue will be are there any secret quid-pro-quos between the cable companies and Verizon to dispel. The marketing and sharing deals aren't secret. So I don't see where those consumer advocate groups will get very far with that angle.

the marketing and sharing agreements border on anti-competitive. Even the DoJ is getting involved.

88615298
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West Tenness

Re: Verizon just has to repeat FCC claims of spectrum crunch

said by Chubbysumo:

the marketing and sharing agreements border on anti-competitive.

How?

ITALIAN926

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Re: Verizon just has to repeat FCC claims of spectrum crunch

What do you mean, HOW? Is that sarcasm?

Verizon and these companies compete on the wireline side for telephone service, internet service, and in some areas, they both offer TV service. If teaming up is not anti-competitive, I dont know what is.

Verizon will have no interest in upgrading to FiOS EVER in those areas. They will actually be deserting their phone business and DSL services to partner with the cable co's. You believe this is good for consumers?

88615298
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Re: Verizon just has to repeat FCC claims of spectrum crunch

said by ITALIAN926:

What do you mean, HOW? Is that sarcasm?

Verizon and these companies compete on the wireline side for telephone service, internet service, and in some areas, they both offer TV service. If teaming up is not anti-competitive, I dont know what is.

How is more anti-competitive than at&t offering the Iphone exclusively for 2 years? Or how about a game being exclusive to XBOX 360. Isn't that anti-competitive because PS3 owners don't have access to it? Oh how about when a movie is on HBO but not Showtime. Or how certain restaurants make deals to sell Coke products but not Pepsi? Isn't that being anti-competitive?

Verizon will have no interest in upgrading to FiOS EVER in those areas. They will actually be deserting their phone business and DSL services to partner with the cable co's. You believe this is good for consumers?

That won't have that desire anyways. Denying this deal won't suddenly make Verizon desire of offer FiOS. Short of a government madate insisting Verizon offer FiOS to everyone it isn't happening.

ITALIAN926

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4 edits

Re: Verizon just has to repeat FCC claims of spectrum crunch

quote:
How is more anti-competitive than at&t offering the Iphone exclusively for 2 years? Or how about a game being exclusive to XBOX 360. Isn't that anti-competitive because PS3 owners don't have access to it? Oh how about when a movie is on HBO but not Showtime. Or how certain restaurants make deals to sell Coke products but not Pepsi? Isn't that being anti-competitive?
Your definition of competition is completely screwed up. You completely left out patents as well. Verizon was the first to have Multi-room DVR for their service. You would call that "anti-competitive" ? When companies are against each other , that drives innovation and brings prices down. If company A has a product and company B does not, that is simply consumer choice ! A restaurant may carry Coke because its priced better, or the owner prefers its taste.

Verizon had the opportunity to initially have the Iphone, they chose NOT to be taken over by Apple. Was a great move because good things come to those who wait. They are still the best and biggest.

Your examples are completely wrong. Anti-competition would be for COKE and PEPSI to shake hands, COKE will now wholesale Sierra Mist (made by Pepsi) , and no longer improve, or in most cases not even promote its own product , SPRITE ! THATS WHATS HAPPENING HERE MY FRIEND. THAT is the exact opposite of competition.

If a customer walks into a Verizon wireless store, the reps should be endorsing FiOS, DSL, digital voice, landlines, whatever ! Not selling the competitions products.

quote:
That won't have that desire anyways. Denying this deal won't suddenly make Verizon desire of offer FiOS. Short of a government madate insisting Verizon offer FiOS to everyone it isn't happening.
And you know this how? Are you President and CEO of Verizon? Even if you were, you could change your mind, couldnt you? The future requires huge pipes. Today's fastest internet 150Mbps FioS is tomorrows dialup. Once upon a time 56k dialup was blazing fast. Wow ! 56 THOUSAND bits per second ! Whoah ! 10 years from now 150 Megs will be laughable. The government didnt force them to initiatially deploy FiOS, what makes you think they are needed for expansion? Verizon has deadlines to meet in hundreds of cities, they are still expanding in those. Once they finish they will have more money to expand, and overall cost of deployment will be cheaper by then.

Zero

join:2009-07-01
Collegeville, PA

If I were the FCC...

I'd approve the spectrum deal but disapprove the marketing arrangements.

The cable companies are free to sell spectrum to whoever they wish. If the only reason they are selling it to VZW is because of the marketing arrangements (and the two agreements are "fused" as they both claim) then the cable companies should rethink their buyer.

The marketing arrangements are what I view as anti-competitive. They are promoting one provider above the rest when there is no basis for a partnership except this spectrum sale. By Verizon Wireless and Comcast partnering together they are in direct conflict with VZW's parent company Verizon. Verizon operates wireline services that directly compete with Comcast and it's wireline services. I'd be seriously concerned that this agreement causes a conflict of interest to the existing competition between Verizon and Comcast's wireline services. This same concern would also apply to AT&T if they were the intended buyer because AT&T and Comcast also compete on wireline services.

bobjohnson
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Re: If I were the FCC...

Its good for the cableco's. If vz partners up and doesn't upgrade fios areas and tries to sell 2 gigs of lte for $30. Most likely noone will bite and score one for cable. VZ wants the spectrum but this deal may be better for the landline provider with a better deal. It kind of forces competition in some areas.

88615298
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Re: If I were the FCC...

said by bobjohnson:

Its good for the cableco's. If vz partners up and doesn't upgrade fios areas and tries to sell 2 gigs of lte for $30.

Show me proof that by denying this deal that Verizon will expand FiOS? Isn't it more likely they'll sell these areas off to some really crappy company. Ask former Verizon customers how they are liking their service from Frontier.

bobjohnson
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1 edit

Re: If I were the FCC...

They most likely won't expand either way but i'm sure that is one of the many reasons that the FCC will allow this to go through. VZ lte or dsl is not anti-competitive to most cable systems, and that was the point of my post.

Edit: It does cause some issues for the other wireless companies that have bothered to expand into some of these areas.

ITALIAN926

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Re: If I were the FCC...

quote:
VZ lte or dsl is not anti-competitive to most cable systems
How bout you re-word your sentence, Im awfully confused.

I'll help you out, Verizon's LTE, DSL, FiOS or ANY OTHER internet delivery method IS competitive to cable co systems. They both provide internet connections. They both provide phone service ! ; they both provide video service !

bobjohnson
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Re: If I were the FCC...

said by ITALIAN926:

quote:
VZ lte or dsl is not anti-competitive to most cable systems
How bout you re-word your sentence, Im awfully confused.

I'll help you out, Verizon's LTE, DSL, FiOS or ANY OTHER internet delivery method IS competitive to cable co systems. They both provide internet connections. They both provide phone service ! ; they both provide video service !

The OP is referring to the deal being anti-competitive, it's not, so that would be correct that it makes for competition. Therefore, not violating any rules. Which is what i stated in my first post.
--


ITALIAN926

join:2003-08-16
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Re: If I were the FCC...

It IS anti-competitive ! Its not to the wireless side of the business, its WRONG when looking at the wireline side of the businesses. Are you purposefully ignoring logic here or what?

bobjohnson
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Orlando, FL

Re: If I were the FCC...

You guys make it seem like comcast is gonna be advertising "Get Fios, it's better than cable!" VZ will be selling fixed LTE in small markets with or without a cable partnership.

ITALIAN926

join:2003-08-16
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Re: If I were the FCC...

Even at this point, youre looking at it from the wrong angle. It will be Verizon selling/promoting Comcast wireline services. Clear now?

bobjohnson
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Re: If I were the FCC...

said by ITALIAN926:

Even at this point, youre looking at it from the wrong angle. It will be Verizon selling/promoting Comcast wireline services. Clear now?

I understand that and i still feel the same way. These companies have all the money because they offer products that people want. In most cases they serve markets that compete with only each other. Who does that hurt? When they advertise in a frontier market the people that they sold off probably have Comcast or TW or whatever if they want it anyways. I just don't believe in regulating free markets I guess.
--

Sammer

join:2005-12-22
Canonsburg, PA
said by Zero:

If the only reason they are selling it to VZW is because of the marketing arrangements (and the two agreements are "fused" as they both claim) then the cable companies should rethink their buyer.

The marketing arrangements are what I view as anti-competitive. They are promoting one provider above the rest when there is no basis for a partnership except this spectrum sale.

You are absolutely correct. The fusing of the marketing arrangement with the spectrum sale is what makes it anti-competitive, against the public interest, and possibly illegal collusion under antitrust law. As long as the fusing exists the FCC should do its job and turn down the sale. Despite what it thinks, Verizon should not be viewed as being above the law.

bobjohnson
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Re: If I were the FCC...

That might be what i'm missing in all this. How is this breaking any laws anymore than say Sprint was when cable was marketing a quad play in areas where they had Sprint local (or Embarq)? It seems to me the same deal except the reasoning is different.
Sammer

join:2005-12-22
Canonsburg, PA

Re: If I were the FCC...

said by bobjohnson:

It seems to me the same deal except the reasoning is different.

First of all, Verizon Communications (majority owner of Verizon Wireless) already has its own double, triple, and quad play deals in parts of the country making it a direct competitor to the cable companies. Second it's a matter of size. Because Sprint Local / Embarq was tiny compared to Verizon it couldn't possibly have the same effect on the market. Third spectrum license sales are being fused with these marketing arrangements. That's three strikes.

bobjohnson
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Re: If I were the FCC...

So the only thing that makes this deal different is that Verizon has something that someone might actually want to buy? And that the deal is bigger than partnerships that happen all over the country in small markets now? Here on my side of FL we are in ATT territory with good coverage from the big 4 and if I go into a bright house store and they advertise Verizon, that isn't gonna make me switch from Sprint... Basically what i see from this thread is if ATT bought the spectrum and VZ made the marketing agreement this wouldn't be an issue. I don't see it taking out the little guys because the cableco's and the incumbents are mostly focused on the big markets with all the choices.
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