WASHINGTON (AP) — The Justice Department's antitrust division on Thursday approved deals between Verizon Wireless and four of the nation's largest cable companies but applied conditions.
Most significantly, the agency said it will not allow Verizon Wireless stores to sell cable TV and broadband services from Comcast Corp., Time Warner Cable Inc., Bright House Networks and Cox Communications in areas where its parent company, Verizon Communications Inc., sells its own TV and broadband service, FiOS.
When it comes to home broadband, Verizon's FiOS provides the only significant competition to cable in many areas. Yet FiOS is costly to build out, and Verizon's commitment to the technology has faltered. Consumer groups who opposed the deal between the cable companies and Verizon said it showed that Verizon was further giving up on FiOS and yielding the home broadband market to cable.
The Justice Department agreed, saying the agreements would harm competition by reducing incentives to compete — resulting in higher prices and lower quality for the public.
Late last year, Verizon Wireless announced deals to buy spectrum from Comcast, Time Warner Cable, Bright House and Cox, its former rivals. In total, Verizon Wireless is paying $3.9 billion for the spectrum, which will allow it to add capacity to its high-speed "4G LTE" wireless broadband network.
Regulators saw the movement of the spectrum from the hands of the cable companies, who weren't using it, to Verizon as a positive one for consumers. It was the co-marketing agreements, signed at the same time, which raised concern.
Apart from limiting the areas where Verizon Wireless stores can sell cable, the agreement between the parties and the Justice Department puts a five-year limit on the co-marketing agreement in other areas. After that period, the parties can apply to extend the deal, said the acting assistant attorney general for the antitrust division, Joseph Wayland.
The Federal Communications Commission and the New York state attorney general's office were involved in the review of the deal.
Comcast, the country's largest cable company, said it is pleased with the outcome of the Justice Department's review.
The FCC cited as a major reason for allowing the deal that Verizon has pledged to sell some spectrum to T-Mobile USA, the No. 4 U.S. cellphone company.
T-Mobile is strapped for space on the airwaves, and the deal with Verizon would let it compete more effectively by expanding its wireless data capacity.
Verizon has also pledged to auction off another spectrum band, but its value is unclear, because of interference concerns.
The cable companies bought the spectrum they now want to sell Verizon with loose plans to start a wireless company or form a joint venture with one. Those plans never came to fruition. Cox had started setting up its own wireless service but gave up last year, saying it would be too small to compete against the big cellphone companies.
The spectrum sale puts cable companies out of the wireless business, where Verizon is dominant.
Svensson reported from New York.
Copyright 2012 The Associated Press.