DOJ Approves Verizon Cable Deal With Some Conditions

August 16, 2012

The Computer & Communications Industry Association appreciates the excellent work of the Justice Department and the FCC in reviewing a complex deal struck by Verizon and its largest cable competitors that would surely be rejected if it took the form of a merger.

Unfortunately, the remedies prescribed by the Justice Department are no match for the powerful business incentives of these dominant network operators/Internet access providers to carve up wireless and geographic landline markets for their mutual benefit.  We hope the FCC is considering stronger interconnection and interoperability conditions that will give existing landline telcom and wireless competitors a chance to survive, because there is no real hope for any new entry into the broadband Internet access business in the U.S.

The following statement can be attributed to CCIA President & CEO Ed Black:

“CCIA appreciates the obvious hard work that the DOJ put into identifying and understanding the many threats to competition and innovation from this deal. As a 40 year-old trade association, CCIA has unfortunately seen deals approved before with limitations that were often not ever really enforced. In recent decades CCIA has been encouraged as the government tried to promote competition with the Bell breakup of the 1980s and with the pro-competitive aspects of the 1996 Telecom Act.  Approval of this deal, unfortunately, seems to represent abandonment of hope for the telecom competition envisioned late last century.

“The Obama administration rightly recognizes the importance of universal access to broadband, but the devil is in the details and deals like this map out further consolidation around the most profitable markets only. Without new entrants, we have to be careful when allowing competitors to cooperate or merge parts of their operations. Once competition is lost, it’s hard to get it back.

The following can be attributed to CCIA Vice President Cathy Sloan:

“The proposed consent decree contains modest time and geographic limits on the Verizon/Cable joint marketing and operating agreements. These and other detailed provisions carefully begin to the address some of the anticompetitive concerns that were so clearly identified by the Justice Department, but they read more like a full employment guarantee for telecom antitrust lawyers than ironclad prohibitions on abuse of monopoly power.  And legacy telco and cable monopolies always have more lawyers than anyone else.

“While we appreciate the DOJ’s efforts to mitigate the anticompetitive effects on consumers and market rivals, they are simply not adequate to prevent Verizon and the cable companies from favoring their own “quad play “ bundle in critical areas like landline backhaul, roaming and wifi offloading.  It’s in the many underlying network functions not mentioned in the commercial agreements where most of the opportunity for anticompetitive mischief lurks.  Most independent wireless carriers will not be able to compete in a “quad play” world and even AT&T will be quite challenged.  That’s a recipe for wireless duopoly.  Meanwhile, the four years before one of the conditions kicks in is more than enough time to kill off residential telco DSL Internet access, which is a recipe for landline Internet access monopoly.

“We hope the FCC understands that if its public interest conditions on the deal are not broader and stricter than remedies available from a pure antitrust perspective, this may be the last straw for competition that forces Congress and future Commissions to return to monopoly regulation.  Affordable Internet access connections are now clearly as important to most Americans as landline dialtone once was.”

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