Verizon co marketing agreementIt looks like the ‘horse trading’ exercise is complete and the historic deal between Verizon and the cable industry for wireless spectrum and resale of each other’s services will be approved. FCC Chairman Genachowski is urging the FCC to approve the deal and both Verizon and their cable partners have reached a deal with the Justice Department regarding anti-trust concerns. All that is left is the formal approval.

While the details have not been released, the Justice Dept.’s consent decree to get the deal approved mandates several conditions, including:

  • Forbids Verizon Wireless from selling cable company products in FiOS areas and removes contractual restrictions on Verizon Wireless’s ability to sell FiOS, ensuring that Verizon’s incentives to compete aggressively against the cable companies remain unchanged.
  • Verizon retains the ability to sell bundles of services that include DSL, Verizon Wireless and the video services of a direct broadcast satellite company (i.e., DirecTV or Dish Network);
  • After five years, the cable companies are no longer barred from selling the wireless services of Verizon Wireless’s competitors, and may partner with other wireless providers;
  • The cable companies can elect to resell Verizon Wireless services using their own brand at any time as provided for under the amended agreements; and
  • Upon dissolution of the technology joint venture, all members receive a non-exclusive license to all the joint venture’s technology, and each may then choose to sublicense to other competitors.

In addition, in Verizon’s DSL markets, Verizon Wireless will only be able to market cable services until 2016. There will also be constraints and time limits on the new products and services that the two partners hope to jointly develop.

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“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,” said Joseph Wayland, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division in a statement.  “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 prized spectrum that the cable industry, which includes spectrum held by Comcast, Time Warner Cable, Cox, and Brighthouse, is selling Verizon was the center piece of the deal. Verizon shrewdly sold off some of their current spectrum holdings to T-Mobile to get the deal done. “Specifically, Verizon Wireless has undertaken an unprecedented divestiture of spectrum to one of its competitors, T-Mobile, and has committed to accelerate the build-out of its new spectrum and enhance its roaming obligations,” noted FCC Chairman Genachowski in a statement supporting the deal.

As more details emerge, we’ll offer additional insight and commentary.

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