Move over AT&T and T-Mobile, you may have company: Arch-rival Verizon Wireless is said to be under the U.S Justice Department microscope, specifically the DOJ’s antitrust division, for recent spectrum deals struck with cable companies like Comcast, Time Warner, Bright House Networks and Cox Communications.
AT&T voluntarily scuppered its all-buy-dead-anyway deal to snap up T-Mobile for $39 billion on Monday, after the Federal Communications Commission sued to block the deal in late August, calling it anticompetitive and warning it could lead to consumer price hikes.
While AT&T and T-Mobile were scrambling to salvage the deal, Verizon made a deal valued at $3.6 billion with cable companies led by its rival, Comcast, to buy up spectrum. Verizon says it plans to use the purchase to expand its 4G LTE network. The deal would also allow both Verizon and the cable companies involved to advertise and sell each other’s services, and could allow Verizon to sell its FiOS TV service directly through its stores (and–here’s the part that has folks nervous–outside its traditional coverage areas).
Not so fast, says the DOJ: According to Bloomberg, Justice Department spokesperson Gina Talamona said the DOJ’s antitrust division was examining the deals, but wouldn’t comment further.
The conundrum: Carriers like AT&T, T-Mobile and Verizon claim they need more spectrum to grow, but growth in this market, given vanishing competition and the nature of spectrum “ownership” almost ineluctably leads to market monopolization.
“This is the crystalline moment when the division of the marketplace becomes completely clear, even to people who haven’t been paying attention,” wrote Cardozo Law School professor Susan Crawford in an email to GigaOM. “VZ and ATT get wireless; cable gets wires; consumers are stuck.”
Bloomberg says the Verizon deal is likely to pass DOJ muster, but Mark Cooper, research director with advocacy group Consumer Federation of America, says it’s bad news: “This agreement is diminishing competition in every way. It means the cable companies are no longer trying to do their own thing in wireless, it concentrates ownership of spectrum and it turns rivals such as Verizon and Comcast into partners.”