The cable companies that plan to sell spectrum to Verizon Wireless opted not to build their own wireless network because the cost would have been at least $10-11 billion with “a very uncertain business outcome,” said Comcast Executive Vice President of Public Policy David Cohen in written testimony prepared for a Senate Judiciary Subcommittee yesterday.
Since 2006, when the cable company joint venture known as SpectrumCo won 20 MHz of AWS spectrum at auction, demand for wireless broadband service has “exploded,” Cohen said. To meet this increasing demand, he said SpectrumCo would have had to acquire “significantly more” spectrum and it was unclear when additional spectrum licenses would be available.
Cohen insisted that the proposed spectrum sale and the co-marketing agreement between Verizon and the cable companies announced at the same time would benefit consumers. The deal partners’ plans, he said, include developing next-generation technology that will “significantly enhance consumers’ communications and media experiences.” Such developments, he said, could include enabling consumer devices to seamlessly transition between WiFi and cellular networks; integrating services such as voice mail, caller ID and contact lists across home and wireless phones; and enabling seamless access to photos, videos and music on home televisions and mobile devices.
Also testifying at yesterday’s hearing were Verizon General Counsel Randal Milch, as well as several opponents of the proposed deal—including Steven Berry, CEO of the Rural Cellular Association and Joel Kelsey, policy advisor for consumer group Free Press.
The Free Press argues that the proposed deal with the cable companies would decrease the likelihood that Verizon will continue to expand its own wired broadband offerings. This view is shared by many other consumer groups and unions. Indeed, there is quite a bit of angst regarding the marketplace implications for this spectrum deal and the co-marketing arrangement proposed by Verizon and its cable partners.
The RCA argues that allowing Verizon to purchase spectrum from the cable companies would give the company too much market power. “I urge policymakers to… allow additional spectrum-starved carriers the opportunity to access this scarce taxpayer resource,” said Berry in a statement issued yesterday.
As a report published by Hillicon Valley notes, however, cable companies apparently had discussions with other wireless carriers about potentially acquiring the AWS spectrum prior to cutting the deal with Verizon. The Hillicon Valley post quotes Cohen stating that Comcast in 2010 had discussions with “virtually” every wireless carrier, including T-Mobile, about that possibility.
According to the Hillicon Valley report, Sen. Herb Kohl (D-Wisc.), chairman of the subcommittee, told reporters after the hearing that he had “strong concerns” that the transaction would hurt consumers but that he would continue to review data before making a recommendation about the deal.
Three of the cable companies involved in the spectrum sale to Verizon—Comcast, BrightHouse Networks and Time Warner Cable–were partners in SpectrumCo. A fourth—Cox Communications—also owns unused spectrum which it plans to sell to Verizon.
