Verizon & Comcast Deny a TV Truce

Verizon Communications Inc. (NYSE: VZ) and Comcast Corp. (Nasdaq: CMCSA, CMCSK) will continue to duke it out on the pay TV front, even as the companies benefit from their wireless spectrum deal, executives from the companies stressed at a Senate hearing Wednesday afternoon.

The two companies faced off against consumer groups Rural Cellular Association and Free Press , defending the wireless operator's $3.6 billion deal to acquire Advanced Wireless Services (AWS) spectrum from Comcast, Time Warner Cable Inc. (NYSE: TWC), Cox Communications Inc. and Bright House Networks , as well as a separate deal to cross-market and sell their services. "These agreements are between cable and Verizon Wireless, not the part of Verizon that provides FiOS," said Verizon executive VP and general counsel Randal Milch. "FiOS is part of the telecom sector, and it will vigorously compete."

Verizon and Comcast have already begun marketing wireless-broadband bundles in Seattle, San Francisco and other markets, but the spectrum sale must pass muster with both the Federal Communications Commission (FCC) and Antitrust Division of the U.S. Department of Justice before it's approved. (See DoJ Sniffs Around VZ Wireless-Cable Deals .) In order for that to happen, both groups must decide it won't harm competition and consumers. Wednesday's hearing was presided over by Senator Herb Kohl, the same Senator that urged regulators to block AT&T Inc. (NYSE: T)'s proposed acquisition of T-Mobile US Inc. . (See AT&T Drops Bid to Acquire T-Mobile and DoJ Blocks AT&T/T-Mobile Merger.)

The deal's opponents drew many comparisons to AT&T/T-Mobile, but Comcast Executive VP David Cohen stressed there's no merger and no acquisition of customers and that not one competitor will be removed from the market as a result of this transaction.

Milch also assured the committee that no consumer would see fewer choices or increased prices as a result of the deal and even talked some smack to prove his point, saying "we'll continue to compete vigorously because [FioS is] a superior product."

Cohen played the other hand, praising FiOS's moves since the deal was announced last year. FiOS has come out with a $69 bundle, reducing the cost of its bundle by one-third in select markets, and has announced a deal with RedBox, he said.

There was also a lot of discussion about Verizon's retail stores, which Cohen said were like Switzerland in that they will become an additional battleground for FiOS and Xfinity, if they sell both. Right now, Verizon stores don't sell FiOS.

The opponents
Steven Berry, president and CEO of the RCA, which is made up of T-Mobile, Sprint Corp. (NYSE: S), MetroPCS Inc. (NYSE: PCS), Cricket Communications Inc. and a number of rural operators, spoke the contrarian view, noting that the deal would trample smaller carriers outside of the "duopoly." He asked for a number of concessions in order for the deal to be completed, including license divestitures, roaming agreements and lower-cost backhaul.

"The Verizon-cable deal is elegantly contrived, superbly clever and very difficult to deconstruct," but it will harm competition and consumers, Berry said, equating the deal to a nationwide non-compete agreement.

On the other hand, Joel Kelsey, policy advisor for the Free Press, called for the entire deal to blocked. (See Rivals Try to Freeze Verizon-MSO Spectrum Buy .)

"If [AT&T/T-Mobile] was the down payment on future competition, preventing this proposed transaction should be the next installment," Kelsey said.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

cnwedit 12/5/2012 | 5:38:36 PM
re: Verizon & Comcast Deny a TV Truce

I think Karen Brown of One Touch Intelligence said this best yesterday at our Cable Next Generation Broadband Services event. From the Verizon side - not Verizon Wireless -- this is a calculated risk.

As Karen laid it out, Verizon believes that if consumers walk into a Verizon Wireless store that is within the FiOS footprint and want to buy broadband with their wireless,  they will chose FiOS over Comcast, Cablevision, TW Cable, Cox, etc.

And if consumers walk into a Verizon Wireless store outside the FiOS footprint, they don't care if they choose cable. They've already admitted that Verizon DSL can't compete and if the transaction is happening outside the Verizon footprint altogether, they could care less who gets the broadband business.

steve q 12/5/2012 | 5:38:26 PM
re: Verizon & Comcast Deny a TV Truce

Hi i see this as the end of Verizon if this happen. With the hope of the customer can goto a Verizon wireless  store and have a chose on what they like to have for there home and not pick the brand name of the store they walk into will be a bad thing for Verizon.Comcast will not stop moving forward with there plan to push out new service and try to force the FCC to make the Verizon Fios service into there own plant.

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