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Verizon may be close to sealing its spectrum deal with major cable companies, say sources close to the company’s negotiations with the U.S. Department of Justice and the Federal Communications Commission.

The DOJ and FCC are currently vetting the purchase, and the Justice Department’s Antitrust Division is likely to place some strict conditions on the arrangement, according to three anonymous sources who spoke to Reuters. The department “had significant concerns about the anticompetitive potential of key features of the proposed agreement,” one of the sources said.

Verizon first announced its intention to buy the spectrum in December. The acquisition includes 122 wireless services licenses from Comcast, Time Warner Cable, and Bright House Networks.

While the extra spectrum would allow Verizon to give its wireless customers faster data service, the matter has stirred up quite a bit of controversy among Verizon’s competitors. T-Mobile, for example, asked the DOJ to kill the deal altogether back in February, arguing that allowing the deal to go through would give Verizon an “excessive concentration” of spectrum, which in turn could stifle competition.

Antitrust regulators have some of the same concerns, especially around Verizon and Comcast cross-marketing each other’s products. In the adjusted deal, FiOS cross-marketing in particular would be prohibited.

The DOJ has been probing the acquisition since it was announced in December 2011. The spectrum Verizon is trying to buy was originally licensed by the government to promote additional competition in the wireless service market.

Filed under: deals

Verizon is currently trying to convince the Federal Communications Commission to approve a deal that would allow the carrier to purchase a section of spectrum currently owned by big cable companies — a move that many smaller carriers, including T-Mobile, claimed would stifle competition.

Now, it seems that T-Mobile has changed its tune.

The two carriers have reached a deal to transfer some of that spectrum should it pass approval by federal regulators, Verizon announced today. T-Mobile is said to be getting the better part of the deal, trading off portions of its spectrum in exchange for Verizon’s as well as purchasing additional spectrum, according to AllThingsD.

T-Mobile said the deal between itself and Verizon will service to strengthen its forthcoming high-speed LTE network and boost its position in 15 of the top U.S. markets, including Philadelphia, Washington D.C., Detroit, Minneapolis, Seattle, Cleveland, Columbus, Milwaukee, and Rochester, N.Y.

Verizon previously agreed to pay cable companies (Comcast, Time Warner Cable Inc., Bright House Networks, and Cox Communications) $3.6?billion to license a portion of wireless spectrum currently not in use. Cable companies also agreed to cross-market Verizon’s home phone, Internet and cell phone services to its customers. T-Mobile previously argued that if the deal was approved it would give Verizon an “excessive concentration” of spectrum, which was echoed by fifth largest U.S. wireless carrier MetroPCS and 10 special interest groups.

T-Mobile said the new Verizon deal will help strengthen the LTE service that it hopes to begin offering next year. It said the deal will boost its position in 15 of the top 25 U.S. markets including cities such as Philadelphia, Washington D.C., Detroit, Minneapolis, Seattle, Cleveland, Columbus, Milwaukee, and Rochester, N.Y.

“This is good for T-Mobile and good for consumers because it will enable T-Mobile to compete even more vigorously with other wireless carriers,” said  T-Mobile CEO Philipp Humm in a statement. “We anticipate FCC approval later this summer, in time for us to incorporate this new spectrum into our network modernization and the rollout of LTE services next year.”

Additionally, Verizon said it will sell of portions of it  700MHz band if all goes according to plan. That may help take some heat off of Verizon from the smaller carriers, but it may not be enough to convince the FCC to approve to deal.

Filed under: deals, mobile

Imagine for a moment that you are sitting in your front yard in a lawn chair, sipping lemonade while attempting to read the latest news on your WiFi-only iPad. You’re just out of range of your WiFi signal. Your neighbor’s signal is super strong, but that selfish hooligan didn’t leave it wide open for you to leach onto. Wouldn’t you love to be able to use a portion of his spectrum anyway while away from your own?

Well, you still can’t, however…

A consortium of cable companies (Comcast Corp., Time Warner Cable Inc., Cablevision Systems Corp., Bright House Networks LLC and Cox Communications Inc) have agreed to enable the sharing of subscriber WiFi hotspots at a grand scale, creating a large region of available signal, in select markets in the U.S.

According to the Wall Street Journal, a single hotspot name and sign on scenario will be used to make it easier for consumers to log in and use available spectrum to surf. It will be a perk for paying broadband account holders in the consortium, but certain providers like Time Warner will let you pay as you go if you like.

[via WSJ]

UPDATE:

Unfortunately, I mis-represented the original article as being for consumer hotspots. This is for subscriber hotspots. Big ups to Josh Ferris for pointing out the error in my ways.

At a senate judiciary committee hearing Wednesday, top executives from Verizon and Comcast reaffirmed their stance that consumers would benefit from the approval of a billion dollar spectrum deal between the largest U.S. carrier and the country’s biggest cable television providers.

Last year Verizon agreed to spend $3.6 billion to obtain a portion of spectrum currently owned by SpectrumCo, a joint venture that consists of Comcast, Time Warner Cable Inc., Bright House Networks, and Cox Communications. That deal is currently under investigation by anti-trust regulators due to concerns that it could stifle competition and impact consumers negatively.

If approved, it would mean that 61 percent of all spectrum in the U.S. (which is used to transmit data via cell phones, GPS devices, radios, broadcast TV stations, and more) would belong to only two companies, Verizon and AT&T. And because this is the only nation-wide portion of the spectrum available for the next several years (if not longer), it also means there likely won’t be many new companies emerging as competitors in the wireless market.

“This deal seems to completely abandon the goals of the Telecom Act,” Senator Al Franken said, in reference to the Telecommunications Act of 1996. The Telecom Act attempted to make it easier for companies to enter into the business of communication services and expand competition.

Verizon’s argument for why the deal should be approved was pretty weak. During the hearing, Verizon Executive VP Randal Milch said his company would dutifully spend billions of dollars to build out SpectrumCo’s spectrum into a viable wireless network. This in turn would generate more money for Verizon by improving their overall wireless network and charging customers to use it.

But currently, Milch argued, the spectrum is “nothing” because the cable companies aren’t doing anything with it. Seriously, he actually said “right now we have nothing. It’s nothing.”

Franken was quick to respond to Milch’s comments, saying of course its something.. it’s a valuable addition to Verizon’s wireless business. “That’s the reason you want it. Right? OK.”

During the hearing, there were also questions about the cable companies’ intent for purchasing the spectrum six years ago.

“When Comcast and the other cable companies… bought spectrum at the FCC auction in 2006, there was hope that the cable companies would develop competing wireless service,” said Judiciary Committee Chairman Senator Herb Kohl. “Instead, these cable companies decided that it would not be economical to spend the resources to deploy this spectrum and enter the wireless market.

Kohl went on to point out that selling this spectrum to the largest wireless company is essentially the opposite of what regulators intended when they agreed to auction it off in 2006.

“Spectrum is government granted public airwaves to be used for the public interest,” Kohl said. “Is it in the public’s (best) interest to sell this spectrum to Verizon, the nation’s biggest wireless company, which will keep it out of the hands of any of the competitors.

“Wouldn’t it have at least been better to have a public auction for this spectrum?” he added.

Kohl also voiced the senate’s “disappointment” over comments made during Comcast shareholder meetings that suggested Comcast never intended to deploy a wireless service. The FCC has regulations against companies that purchase spectrum for its value or allow spectrum to be “warehoused” (intentionally not using purchased allotment of spectrum for strategic advantage over any competitors).

However, Comcast Executive Vice President David Cohen said wasn’t at all the case. In fact, Cohen claimed that SpectrumCo met with every single carrier about deploying a wireless network using its spectrum. The company’s original intent was to have an integrated communication service that included cable TV, broadband Internet, home telephone, and wireless, he said.

Despite concerns over an anti-trust investigation, Comcast determined that the best way to use its investment in the spectrum was to partner with Verizon. As the largest wireless company, Verizon could not only offer the most money, but it could also position itself as the best suited to deploy a wireless network using the spectrum.

Screenshot of Senate hearing via Senate.gov

Filed under: deals, media, mobile, VentureBeat

In an ironic turn of events, the fourth largest U.S. carrier T-Mobile is asking the Federal Communications Commission (FCC) to halt Verizon’s pending acquisition of additional wireless spectrum currently licensed by some of the nation’s biggest cable companies.

Verizon previously agreed to pay cable companies (Comcast, Time Warner Cable Inc., Bright House Networks, and Cox Communications) $3.6?billion to license a portion of wireless spectrum currently not in use. In return, the cable companies will cross-market Verizon’s phone, video, Internet and cell phone services to its customers. Additionally, Verizon has also agreed to halt any further build out of its FiOS broadband cable TV and Internet service.

T-Mobile is arguing that allowing the deal to go through would give Verizon an “excessive concentration” of spectrum, which in turn could stifle competition. Verizon, on the other hand, is defending the deal because it will allow the company to boost download speeds and better facilitate the growing number of data-hungry smartphone customers.

The fact that T-Mobile is against allowing any one company to control a vast portion of spectrum is interesting. Just months ago, the company unsuccessfully fought to for federal regulators to approve its $39 billion merger with AT&T. The merger fell through in December 2011, leaving T-Mobile once again as the smallest of the big fish carriers.

T-Mobile isn’t the only one urging the FCC to stop Verizon from obtaining more spectrum. The fifth largest wireless carrier MetroPCS and 10 special interest groups have also filed petitions with the FCC in regards to blocking Verizon’s deal.

Via WSJ; Image via Freepress.net

Filed under: mobile, VentureBeat

by Todd Bailey

Is it better to make nice with competitors (perhaps if it’s financially beneficial)?  In some cases, it may be better to damper notions of competition and pickup on financially-sound sentiments regarding partnerships.

However, are such unions good for other brands in the industry?  The T-Mobile brand does not appreciate the planned purchase of spectrum from cable companies by competitor, Verizon.  Wait.  Didn’t T-Mobile attempt to merge with AT&T recently?  That didn’t go over well; so, T-Mobile wants to crash Verizon’s merger party, filing a request with the federal government, urging them to pull the cord out of the wall on the incipient deal?

The expected Verizon deal involves Comcast, Time Warner, Bright House Networks, and Cox Communications.  T-Mobile is fourth in the cellphone vertical; but, that position is not offering enough security.  The brand thinks the Verizon deal would be unfair, placing “excessive concentration” (of wireless spectrum) at the whims of T-Mobile’s competitor.

Purchasing spectrum enhances a wireless carriers’ position to effectively market and advertise products and services.  The alignment of forces is not farfetched these days.  SimplyMeasured joined forces with Klout recently; the former is not charging users extra for the added statistics offered with the help of the latter.  Verizon reached a deal in December to snag the wireless spectrum for $3.6 billion.  Verizon made a separate deal, allowing it to market its services (and vice versa).  Such a partnership could be incredibly profitable for Verizon.  T-Mobile doesn’t like those kinds of projections.

Some politicians don’t like the dynamic of the relationship either, observing Comcast and Verizon were working side by side as if…partners not competitors.  Al Franken, Senator of Minnesota, mentions, “These joint-marketing agreements will turn these rival companies into partners, rather than competitors.  I fear this will ultimately mean less competition, less choice, and higher prices for consumers.”

What does Verizon have to add to the conversation?  At present, Verizon is not ‘accepting calls’ regarding the union.  As more brands leverage digital channels of marketing, will such deals become common reruns?

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Both houses of Congress passed a bill today that could put the country on a path to getting access to a greater portion of the wireless spectrum, but it’ll come at the cost of sacrificing some of the freely available broadcast TV stations.

If you search for some kind of appropriately named piece of legislation like the “Open up more wireless spectrum so my iPhone browser will load faster act”, you won’t find it. That’s because the bill congress passed was actually an extension of the payroll tax, which essentially lets people keep more of their paycheck by removing some of the standard taxes. To pay for this extension though, congress needed a new source of income. That’s where the TV spectrum comes in.

The bill is setting up a voluntary auction for the block of spectrum currently reserved for television broadcasts. Many of the owners originally granted a license for their part of the spectrum are getting a pretty good deal because they paid very little money compared to what it’s now worth on the open market. To give you some kind of understanding of the value, the 2008 auction for wireless spectrum ended up bringing $19.6 billion — with over $16 billion of that coming from AT&T and Verizon. Verizon is also poised to pick up a large chunk of wireless spectrum from Comcast, Time Warner Cable and Bright House Networks for a cool $3.6 billion (pending approval by the DOJ).

So clearly, we’re talking about a lot of money here, which the U.S. government will get a cut of.

Despite the FCC’s countless pleas to make more spectrum available, congress has mostly neglected to address the issue directly. The payroll tax extension is more or less seen as a way to kill two bird with one stone. And that’s both a good and a bad thing.

The good think about this auction is that wireless carriers will be able to speed up their networks, expand coverage area of high-speed internet to rural areas of the country, and (in turn) create more jobs. The bad part about this legislation is that it has the potential to sacrifice some the broadcast TV channels that are only just now starting to get used by tech companies as a valuable public resource. For instance, Boxee just launched a Live TV stick, which feeds the HD TV broadcast signal into the company’s Boxee Box set-top box — thus providing owners with a way to both cut the cord and still get some live content like local news and sports. There’s also recent Barry Diller startup Aereo, which uses tiny HD antennas (one per user) to stream the broadcast TV content thru a variety of connected devices.

While I welcome the additional spectrum availability, part of me wonders whether it would have been better for congress to directly address the issue rather than issuing a voluntary auction to pay an immediate bill like the payroll tax cut extension.

[Via the Washington Post; Gavel photo via ShutterStock]

Filed under: media, mobile, VentureBeat

In a bid to shore up its 4G wireless network, Verizon has agreed to buy 122 wireless services licenses from Comcast, Time Warner Cable and Bright House Networks, the company announced today.

Comcast, Time Warner Cable and Bright House Networks initially set up a wireless venture called SpectrumCo in 2007. But because the venture didn’t turn into anything substantial, the company’s are cutting their loses and selling the assets to Verizon. The deal stipulates that Comcast will receive $2.3 billion, Time Warner Cable will get $1.1 billion and Bright House Networks will bank $189 million, based on how much ownership each company had in SpectrumCo. The SpectrumCo companies actually bid $2.4 billion for the spectrum in 2006, so Verizon is paying a $1.2 billion premium for it.

If U.S. regulators approve the move, Verizon will own much more spectrum, as the assets cover 259 million Americans. The goal would be to give more Verizon customers across the country its 4G LTE service, which is already the largest next-gen 4G network. The U.S. Government plans to open more its wireless spectrum to mobile operators at an auction, but Verizon is premptively moving ahead of that to secure itself spectrum.

“Americans deserve excellence from a wireless service provider, and innovative wireless companies plan ahead in order to deliver on that expectation,” Dan Mead, President and CEO of Verizon Wireless, said in a statement. “Spectrum is the raw material on which wireless networks are built, and buying the AWS spectrum now solidifies our network leadership into the future, and will enable us to bring even better 4G LTE products and services to our customers.”

The deal, pending approval from a highly regulatory FCC and DOJ, would put a ton of pressure on AT&T, which already is behind Verizon in building out a true 4G network. Verizon offers 4G LTE in more than 150 U.S. markets. AT&T (and T-Mobile) mostly offer up HSPA+ as its version of 4G, which delivers faster speeds on already established 3G networks. That said, AT&T now has LTE live in nine markets in the U.S. and plans on steadily adding more.

AT&T is also struggling right now because it is looking less likely that its proposed buyout of T-Mobile will happen. The FCC has blasted the potential AT&T-T-Mobile merger in a 157-page report that ultimately concluded that the merger would ultimately hurt U.S. consumers. AT&T and T-Mobile-parent Deutsche Telekom have actually withdrawn their FCC application for the merger, so the company’s may also be planning to lose this fight.

Your move, AT&T.

Filed under: mobile