Verizon, Cable Companies Say Commercial Agreements Pose No Danger

Specifically, there is concern the agency agreements, which allow the cable companies to sell Verizon products, and Verizon to sell cable products, will undercut a major source of competition in the fixed network business, namely Verizon’s need to compete with cable, and cable to compete with Verizon.

But reseller and agency agreements are quite common in the communications business. Nor is it immediately clear that the agency agreements (resale of Verizon services under cable brand names will not happen for five years, at least) are within the proper purview of the Federal Communications Commission, though there is uncertainty about the matter.

The parties point out that the spectrum Verizon Wireless is buying from those firms is not related contractually in any way to the agency agreements, though some fear there is a de facto quid pro quo.

Also, it arguably makes a big difference where the agency deals are followed by actual sales efforts. In areas where Verizon has no fixed network assets, it isn’t so clear that there is any effective diminution of Verizon’s investment in fixed resources, as it owns no such assets in most regions of the country.

Cable operators have no retail wireless operations, so adding the ability to sell Verizon Wireless services, under Verizon’s brand name, similarly would not pose any particular change in competitive dynamics.

There is concern about the potential impact in areas where Verizon does own and operate fixed networks, though. On the other hand, in most such areas Verizon already has built out its FiOS network, so the “depressing” impact of any agency deals does not seem to represent a restraining impact on investment, either.

The key areas where there might be legitimate concern are Verizon fixed-line service areas that do not yet have FiOS builds underway. On the other hand in principle, the deals would not be dissimilar from deals AT&T, Verizon and many other telcos have with satellite providers that allow bundling of satellite video with fixed network voice and broadband access.