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Federal agency says collusive agreement could sink otherwise acceptable sale of LTE spectrum

America's largest carrier, Verizon Wireless is on the verge of closing a major $3.9B USD spectrum buy, a purchase which would greatly improve its high-speed LTE network.  However, on the eve of the deal, the U.S. Federal Communications Commission has hit the brakes, alarmed at a "side-deal" in the purchase.

As of this week Verizon representatives expressed confidence in their position, stating, "[W]e have made a persuasive case."

But the FCC is worried about a provision of the deal involving Comcast Corp. (CMCSA), Time Warner Cable, Inc. (TWC), and BrightHouse Networks.  Verizon Communications competes with these companies via its fiber optic (FiOS) network, offering internet, phone, and television packages.  But under the deal, the companies agreed to not publish adversarial adds in regions of mutual service, instead offering up mutual advertising campaigns and dividing up customers.

Many in Congress and at federal regulatory industries feel this is a textbook example of collusion.  Others argue businesses should be free to do whatever they want, regardless of the impact to consumers.

Verizon FiOS
The FCC and DOJ fear that Verizon's promise to jointly advertise with its competitors is textbook collusion. [Image Source: Android Community]

The FCC and U.S. Department of Justice are both looking to block the minor provision of the deal involving the non-compete agreement.

Otherwise, they are relatively pleased with the deal and with Verizon's recent behavior.  While FCC Chairman Julius Genachowski reportedly plans to implement requirements that would force Verizon to offer competitors fair data roaming agreements on its network, he is moving to conditionally approve the deal, ahead of a late August review deadline.

But approval will require Verizon to revise its advertising promises to cable companies, which some fear might be the underlying carrot that convinced the cable providers to offer up their horded spectrum in the first place.  Nullification of the provision could lead cable providers to ask for more money or even move to cancel the deal.

Verizon has worked hard to win approval of the deal, turning rival T-Mobile USA (a Deutsche Telekom AG (ETR:DTE) subsidiary) into a believer, after following an FCC suggestion to sell it part of the spectrum and swap some additional spectrum with the nation's fourth largest carrier.

Source: Wall Street Journal



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Random rules
By knutjb on 7/13/2012 3:38:41 PM , Rating: 1
quote:
The FCC and U.S. Department of Justice are both looking to block the minor provision of the deal involving the non-compete agreement.

Otherwise, they are relatively pleased with the deal and with Verizon's recent behavior. While FCC Chairman Julius Genachowski reportedly plans to implement requirements that would force Verizon to offer competitors fair data roaming agreements on its network, he is moving to conditionally approve the deal, ahead of a late August review deadline.


So other than a minor issue the FCC and DoJ ok with Verizon. Wait, no the FCC plans to implement new requirements on roaming agreements to FORCE Verizon to offer "fair" pricing to competitors.

I don't like collusion but bureaucrats inventing new rules to do what they think is best is a bigger problem. Forcing this kind of change is dangerous. Is Verizon a monopoly? What direction is Genachowski going? What is "fair?" I don't trust them, the FCC has too much power to apply political beliefs to technical issues.




RE: Random rules
By wiz220 on 7/13/2012 4:13:27 PM , Rating: 2
Well, if you don't trust the only people that can regulate these businesses (Government, via the FCC), but you don't like collusion and market manipulation, what exactly is your proposal for a solution? Because it seems like after those two statements you're at a serious road block.


RE: Random rules
By knutjb on 7/13/2012 7:55:24 PM , Rating: 2
quote:
what exactly is your proposal for a solution?
Clear, concise laws that do not allow bureaucrats or companies room to creatively interpret the laws intent. The FCC is inventing rules and policies to make things fair. Then they add more rules to make thing more fair (because the last ones didn't work the way they wanted), and so on. All the additional rules do is muddy the water and we end up paying more for less.

quote:
Well, if you don't trust the only people that can regulate these businesses (Government, via the FCC),
The problem is when they go beyond the scope intended by their positions. If we don't pressure our representatives to keep them in check they run amok. The FCC has been running amok for some time.


RE: Random rules
By ats on 7/13/2012 8:12:09 PM , Rating: 2
There is no such thing as a clear concise law. Never has been, never will be. It is impossible to write laws in such a way that they cannot be creatively interpreted. This has been true since the first law was invented. The best you can try to do it reign things in every chance you get.


RE: Random rules
By FITCamaro on 7/14/2012 10:00:05 AM , Rating: 2
No when someone is honest they read the text and do what it says. A speed limit does not mean maybe its ok to do a few over. Its the limit. Now does that mean you'll always get in trouble for exceeding it? No because cops can't pull over every single person for speeding. And radar/laser guns are only so accurate.

Laws can be very clear. And when you're unsure, you go back to other commentary the person(s) who helped write them have made. The only laws that are ever interpreted differently are those in the Constitution.


RE: Random rules
By JPForums on 7/17/2012 10:16:51 AM , Rating: 2
quote:
Laws can be very clear. And when you're unsure, you go back to other commentary the person(s) who helped write them have made.

Yes. In fact, I wish laws had a mandatory statement of intent, application, or scope so that lawyers would stop trying to use laws for cases so obviously unrelated to the laws original purpose. Even if they rarely succeed, they waste the time and money going into the courts.


RE: Random rules
By foolsgambit11 on 7/13/2012 9:25:36 PM , Rating: 2
The law in this case is that the FCC has the authority to draw up statutes to best manage the EM spectrum for the benefit of the people of the United State of America. So they aren't interpreting the laws intent, they are (re)writing the law they were put in charge of writing. Essentially, Congress delegated their lawmaking power to the FCC - a good thing, since Congress is basically doing nothing these days.

But on the point at hand, collusion has been prohibited for a good long while (in most cases), and this deal looks like a pretty cut and dry case of collusion.


RE: Random rules
By knutjb on 7/13/2012 11:08:33 PM , Rating: 2
quote:
But on the point at hand, collusion has been prohibited for a good long while (in most cases), and this deal looks like a pretty cut and dry case of collusion.
quote:
However, on the eve of the deal, the U.S. Federal Communications Commission has hit the brakes, alarmed at a "side-deal" in the purchase.
On the fiber / cable networks that is not directly part of the spectrum.
quote:
While FCC Chairman Julius Genachowski reportedly plans to implement requirements that would force Verizon to offer competitors fair data roaming agreements on its network
So modify how it can use the spectrum because of a side deal, albeit bad side deal, on fiber / cable networks?

quote:
The law in this case is that the FCC has the authority to draw up statutes to best manage the EM spectrum for the benefit of the people of the United State of America. So they aren't interpreting the laws intent, they are (re)writing the law they were put in charge of writing. Essentially, Congress delegated their lawmaking power to the FCC - a good thing, since Congress is basically doing nothing these days.

Again, beg to differ. When political bureaucrats have excessive power to move the playing field and change the rules on a whim it kills jobs. Point, with a fluctuating environment it is hard for any company to make long term plans. If they are concerned the rules are going to change they do not expand, hire, and sit on their cash, e.g. the trillions corporations have sitting on the side lines partly because of the yearly tax code instability.

The massive amount of manpower required to analyze and interpret the laws, rules, regulations, and then determine how to implement them is beyond most peoples understanding. The estimate the government uses is about $100,000,000.00 in new expense to businesses for every new rule. That expense eventually trickles down to us in the final cost of the service, product, etc...Yeah stick it to those evil corporations, so we can pay more for our phones, internet, and everything. If the rules didn't keep changing business would focus on ... business. Prices would be lower and the economy would be stronger. What a concept.

Another problem, when bureaucrats re-write the rules they frequently add whatever they [bureaucrats] want even when it is not specified in the governing laws. Rarely do the changes truly benefit the people. I know this from 21 yrs working in the government. A quick fix can take 3-4 years before it reaches the end user. Quick fixes are very rare.


RE: Random rules
By FITCamaro on 7/14/2012 10:02:51 AM , Rating: 2
How is it good? I'd prefer a Congress that answers to the people rarely doing anything to a bunch of unelected bureaucrats answerable to no one doing a lot. But that's exactly what we have today.

If Congress wants to appoint a group to handle an issue fine. But any regulation (ie. law) they want to impose should have to be voted on by Congress. Otherwise why do we have representatives in the government?

This is why a small government is necessary. The federal government shouldn't have its hands in everything. It should only be doing the jobs that it is given in the Constitution.


RE: Random rules
By Omega215D on 7/13/2012 5:00:57 PM , Rating: 2
All I know is FiOS is not available in my section of NYC because of Time Warner Cable. If it was available I would be paying $65 less per month (tv, internet, phone).


RE: Random rules
By FITCamaro on 7/16/2012 7:48:17 AM , Rating: 2
You have government to blame for that. Not companies.


RE: Random rules
By ats on 7/13/2012 7:11:44 PM , Rating: 2
I think you are forgetting something. We are the landlords here. Tenant A wants to sell its lease to prospective Tenant B, we have to approve such a transfer as we are the legal owner. We can put any conditions on Tenant B that we deem necessary as in effect, he is signing a new lease agreement with us.

In short, Verizon does not own any spectrum, they have leases with us to use spectrum. It is in our own best interests to make sure the new lease agreement is as advantageous to us as possible.


RE: Random rules
By knutjb on 7/13/2012 7:32:47 PM , Rating: 2
Who owns the equipment?


RE: Random rules
By ats on 7/13/2012 8:07:31 PM , Rating: 2
Who owns the equipment doesn't matter. The valuable item is the spectrum, which WE THE PEOPLE own. Always have, always will.


RE: Random rules
By knutjb on 7/13/2012 10:15:50 PM , Rating: 2
If Verizon leased the spectrum they have control over it. It is no different leasing a house, so long as you don't break the law relating to the lease, the landlord cannot tell you who can visit you. Same here, once leased we cannot tell Verizon how they use the spectrum if it's not specified in said lease. To change it after the fact is very problematic, though that doesn't seem to bother this administration.

So, Verizon has use of the spectrum but the FCC doesn't like other dealings Verizon has. Rather than fixing those specific problems they are changing the rules over spectrum use. You don't see a problem with that?


RE: Random rules
By MadMan007 on 7/13/2012 10:36:34 PM , Rating: 2
Great speech but...

1) You don't know the terms of the lease, do you? Any chance it might include a 'do not sublease' clause?

2) This is about SpectrumCo (the cable companies) *selling* spectrum rights to Verizon. Selling, not leasing. Therefore it is very much in the FCC's purview to regulate the spectrum use rights sale.


RE: Random rules
By mcnabney on 7/14/2012 1:28:43 AM , Rating: 2
The spectrum licenses purchased from the government at auctions typically require:
1. Minimum build-out requirements. Essentially, if you don't put the spectrum to use in each market the government can take it back from you and sell it to someone else that will.
2. There are caps in many markets on how much spectrum a single company can own. This is to encourage a greater number of smaller players. It turns out that this idea isn't great for pricing since the industry's capital costs increase with each new player.
3. The spectrum has specific power limitations and interference restrictions in relation to adjoining bands.

Nothing in there about giving away your service.


RE: Random rules
By Jeffk464 on 7/14/2012 2:17:39 PM , Rating: 4
"Others argue businesses should be free to do whatever they want"

Yes these "others" are corporate executives and public shills.


RE: Random rules
By NellyFromMA on 7/16/2012 10:38:24 AM , Rating: 4
Or politicians that get paid handsomely to support actions that run counter to constituent well-being or betterment.


Block this too!
By Church of Dirac on 7/13/2012 3:42:40 PM , Rating: 3
In the interest of fairness, the FCC needs to block this as they blocked AT&T from buying T mobile. While they're at it, they need to break up all cable companies and install Federal Fibre high speed internet and cable in everyone's house for the low cost of $100 billion tax dollars.




RE: Block this too!
By MadMan007 on 7/13/2012 4:31:24 PM , Rating: 3
Separating infrastructure ownership from content delivery service would be a more reasonable and practical thing to do. (I know you were just be hyperbolic.:) )


RE: Block this too!
By bah12 on 7/13/2012 5:54:14 PM , Rating: 2
Ding! I would much rather take ALL the historical money wasted on FCC and Government regulation of these infrastructure monopolies, and go back in time to use that funding to have the government build the infrastructure and lease it to the Providers at a fixed rate.

I firmly believe that infrastructure such as roads, electric, water, and now internet should be provided door to door via federal funding. It should then be open to anyone to use that infrastructure.


RE: Block this too!
By Bad-Karma on 7/14/2012 8:53:49 PM , Rating: 2
Because the US government is doing such a great job maintaining, upgrading, and expanding it's current infrastructure?

Several parts of the country can not count on municipal water quality or consistent power delivery. Much of the highway infrastructure rolled out since the 1950s is in decay and considered long past its replacement date. We have bridges throughout the country whose steel is little better than rust holding hands. And you propose having them take over the internet?

If the US government ran the internet's infrastructure you'd be lucky if we had progressed past 300 baud modems.


RE: Block this too!
By bjacobson on 7/13/2012 7:41:58 PM , Rating: 2
late to the party bro, they already paid the Teclos $200B for all of us to have a dedicated 44mbps data fiber to each house by August 2009.

They pocketed the cash and got lucky with DOCSIS.


Blah Blah Blah
By FITCamaro on 7/13/2012 3:24:06 PM , Rating: 1
rabble rabble rabble Cable companies and Verizon are evil rabble rabble rabble.




RE: Blah Blah Blah
By nolisi on 7/13/12, Rating: 0
RE: Blah Blah Blah
By semiconshawn on 7/13/2012 4:17:28 PM , Rating: 1
Wow way to take something completely off topic and make it completely irrelevant. Troll.


RE: Blah Blah Blah
By kingmotley on 7/13/2012 5:46:53 PM , Rating: 2
What the heck is a Max and eco?


RE: Blah Blah Blah
By SpartanJet on 7/13/2012 4:35:30 PM , Rating: 1
Try and dismiss this as much as you want, this is yet another example why we need regulatory oversight on businesses. They will always do whats best for themselves, not the consumer. Its a shame some people can't see past their party lines. Educated people can make informed choices about issues regardless of what their tea party overlords tell them to think.


RE: Blah Blah Blah
By JPForums on 7/17/2012 10:04:07 AM , Rating: 2
quote:
... this is yet another example why we need regulatory oversight on businesses.


Collusion is not a lack of regulation issue. It is a failure of law enforcement issue.

quote:
Its a shame some people can't see past their party lines. Educated people can make informed choices about issues ...


Any educated person can spit back out a short term answer based on their education background. However, you have to put some time and effort into independent consideration (thinking for yourself) to evaluate the long term effects of actions (beyond the obvious).

Perhaps it is the opinion of those with opposing viewpoints that if the judicial system with a plethora of applicable antitrust/anti-competition law can't get the job done, then neither can a regulatory agency. Given this view it would make sense that they wouldn't want to waste more money just to slow progress down and make products more expensive. So rather than assume people with opposing views are mindless pawns and pass this off as unquestionable evidence of your viewpoint, why not try understanding their view and make a logical case as to why this supports yours.

My opinion is that, regardless of your view of the necessity of regulatory agencies, antitrust/anti-competition issues should be handled by the courts. Otherwise, we as tax payers are paying twice for the same service. On top of that, any ruling a regulatory agency makes has the potential, even if improbable, of being overturned by the courts. We would need far less interference by regulatory agencies if the laws already in place were effectively enforced. Perhaps then, those currently fighting so hard against regulatory agencies would be more receptive to it (when limited to areas that legislation doesn't cover).


freelance
By PittmanJack on 7/15/2012 2:27:52 PM , Rating: 2
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RE: freelance
By inperfectdarkness on 7/16/2012 4:38:28 AM , Rating: 2
how the fawk is this spammer not banned already?


Bussiness as usual
By mchentz on 7/13/2012 3:27:39 PM , Rating: 2
SSDD imo. Us consumers are constantly being ripped off by Cable/Telecom companies.




lols
By NellyFromMA on 7/16/2012 10:36:59 AM , Rating: 2
quote:
Many in Congress and at federal regulatory industries feel this is a textbook example of collusion. Others argue businesses should be free to do whatever they want, regardless of the impact to consumers.


Lol, if the companies coordinate to divy up consumers, that IS anti-competitive. That IS collusion. That IS anti-trust violation.

This is why the US telecom industry is a disaster in its current form. I'm actually going to go a bold step further and say it is one of the largest contributors to our falling behind other countries in virtually ANY industry involving or assisted by technology.

These companies CAN compete, we have SEEN the model work with FANTASTIC resutls all over the world. The problem is Verizon may as well be an oligarch in this market and somehow sets its own terms, 9/10 times to the DETRIMENT of the consumer.

Consumer ignorance is NOT an excuse to exploit said consumers. THIS is one of the FEW times the government should get involved: to protect consumers from being manipulated by unfair markets.

Reminds me of another industry that behaves similarly (yet they are exempt): health insurance. yeah, thats worked out well too...




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