The deal whereby Verizon Wireless buys mobile spectrum from leading cable operators, with the cable operators and Verizon Wireless agreeing to wholesale each others products, raises some interesting questions.

There is some thinking, in some quarters, that Verizon’s purchase of wireless spectrum from Comcast, Time Warner Cable, Bright House Networks and Cox Communications, plus deals to allow resale of cable produces, plus reciprocal rights for the cable companies to resell Verizon services, has implications for the state of communications competition in the United States. What does Verizon-cable deal mean?

At some level, it is hard to contest that notion: almost anything any of the largest service providers does has some competitive implications.

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But the specific concern about the Verizon deals with cable is a de facto carving up of the U.S. communications business, with the cable companies acknowledging Verizon’s dominance in wireless, while Verizon acknowledges cable’s advantages in fixed line broadband.

In this line of thinking, the danger is that the market is losing a number of competitors: cable in wireless and Verizon in fixed line broadband. Again, there is some truth here, and some potential for some amount of now-unknown reduction in priorities and therefore, competition.

There might be other questions, if the deal passes regulatory scrutiny. In many markets, there is a greater reliance on mandatory wholesale mechanisms to support broadband voice competition. In some markets, including Australia, New Zealand and Singapore, a single network will provide retail providers access.

In most European markets, robust and mandatory wholesale arrangements exist, but there is no single national wholesale provider that is barred from retail operations.

Few would suggest there is any possibility of that happening in North American markets. But what might be possible on a voluntary basis is the new issue.

If, in fact, Verizon, Comcast, Time Warner and Cox Communications (Bright House Networks is part of the deal, but is small enough not to have as much potential national impact) all can source wholesale service components, then what you have, in essence, is a huge, voluntary fixed network wholesale capability that could provide those providers, though not other competitors, many of the advantages other regulatory regimes provide, at least to some degree.

That is to say, out of region, the deals potentially allow each participant the ability to create a unified, four-product service bundle using a mix of owned and leased facilities. Though in a “perfect” world each contestant might prefer the ability to provide voice, video, mobility and broadband access on fully-owned facilities, that is not possible, either financially or for regulatory reasons.

Such capabilities, of course, will extend, in each market, only to one of the cable partners and Verizon Wireless. But the language of the deal seems to include the eventuality that each of the cable partners, for example, can obtain wholesale Verizon Wireless capacity at some point in the future.

In principle, that would be used to create “branded” cable wireless products, where for the first several years each partner could only “resell” the other branded products. But if the deal is reciprocal, you would have a limited, functional equivalent of “wholesale network-retail provider” arrangements.

That won’t necessarily help other non-facilities-based competitors. In fact, some will note that it is unlikely Comcast would use Verizon to “compete” against Time Warner or Cox. Cable companies do not do so in their consumer operations. Verizon, on the other hand, will use such arrangements to improve its chances against other telecom companies.

So the deal is marginally pro-competitive in that sense. On the other hand, at some point in the future, when serious, if not totally fundamental rethinking of the basic framework of communications regulation gets looked at again, and that will happen, the model could, at least in theory, be among proposals for broader change.

Might each dominant cable and telco provider in each market then be required to provide wholesale access to all other retail contestants? If so, what conditions might be required?

Other competitors will gripe if the requirements are that rates and terms be voluntary and market based, much as competitive local exchange carriers can, or would like to buy, services from underlying carriers AT&T, Verizon and CenturyLink.

But voluntary access, on a non-discriminatory basis, to at least the dominant cable and telco networks in major markets, could provide many of the benefits of a single national wholesale provider and then unlimited numbers of retail providers.

Cable companies wouldn’t like that arrangement any more than AT&T and Verizon would. But it seems unlikely cable “forever” can avoid such requirements, if “like services should be treated in like matter,” and if market power tests continue to be relevant in communications regulation.

Also, the markets have changed.

In 2004, for example, the International Telecommunications Union still was saying that “In general, the majority of the least developed countries (LDCs) have made little progress in the past five years in closing the gap in access to basic telecommunication services. In some cases, teledensity (the number of telephone lines per 100 people) has fallen, as population growth has outstripped telecommunication growth.”

In 2011, the ITU reported that “mobile cellular penetration in the developing world reached 70 percent at the end of 2010, just six years after reaching 70 percent in the developed world.”

In 2010, mobile cellular penetration in Africa which is at 45.2 percent was higher than mobile cellular penetration in the Americas in 2004, that was 42.8 percent. Meanwhile, the ITU said, mobile penetration in the Americas had grown to 94.5 percent by 2010. Mobile penetration explodes

It would be fair to say that was a largely unexpected development. Where for many decades policymakers had worried about how to “increase tele-density” in developing regions, mobile adoption simply has answered the question in less than a decade.

In hindsight, it was not a “bad” question to ask how the world was going to provide communications to most people in the world, at prices they could afford. What arguably has not been done so well is all the money the global industry and policy establishment has, essentially, wasted in discussions about how to increase tele-density at all.

As it turns out, not only has mobile service dramatically proven it is the answer to the question, but the pressing questions now have turned elsewhere, namely to the question of how to supply Internet access, and broadband, to most people.

Nor is it immediately clear, or obvious, what the key questions are, or ought to be, in that regard. A rational person will note that “broadband access to the Internet” is likely to use mobile, not fixed facilities, in many cases, even though it seems most of the policy attention still gets focused on “what to do” to create incentives or forward motion on faster fixed facilities.

That is not to say the range of questions will be easy to address, but will we be saying, in hindsight, that our policy efforts once again represented “wasted” effort and resources?

Will we find we had spent too much time asking relevant new questions (about Internet issues) but proposing old answers?

To use but one example, the Federal Communications Commission tends to insist, in its rule-making, that “like services be treated alike.” But the virtual collapse of the business walls between cable TV and telecommunications, and the coming porosity of the line between mobile-provided services and fixed-network services, makes past distinctions between different industries an impossible matter.

In the U.S. market, different applications and services have been governed by distinct models of regulation. There is one set of rules for newspapers. There historically has been a similar set of rules, which is to say, “few to no rules” about enhanced data services.

There is a different set for “common carrier” services such as telecommunications.

There are yet different rules for radio and TV broadcasters, and a distinct set of rules for cable TV service.

All of that will be hard to maintain as the material foundation of each industry has changed. To use but one obvious example, why are “cable” companies regulated in different ways from telcos or competittive local exchange carriers, if all provide the same services?

One might argue that the “services” are regulated the same way, but the networks are not. That might seem rational to some, but not to all. The obvious corollary is what ought to be done, or what can be done, so that “like services are treated the same,” for purposes of “protecting the public” and yet “spurring growth.”

Nor, in reality, are such questions generally relevant. There are but limited moments of time when serious changes in the frameworks are conceivable. Many would say “we didn’t do enough” when the Telecommunications Act of 1996 was passed, and that could be true both for proponents of greater action to promote competition as well as those who chafe at old restrictions.

Regulation and incentives for fixed network infrastructure will continue to be difficult, if only because the revenue models that underpin all fixed networks are getting more challenging, compared to the economics of providing applications and services using wireless networks.

In the history of U.S. telecommunications, there have been but a small handful of really-foundational moments in regulation, and likewise in the history of the cable TV industry.

One wonders when the next “moment” will arrive, and whether we will ask the right questions. Even that is not so important as whether the constellation of political forces will allow movement towards a more rational and flexible framework that balances “public and national interest” with “flexibility to adapt, innovate and create high value” (both for end users, the nation and providers).

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