The US Department of Justice is delaying the proposed acquisition by Verizon Wireless of wireless broadband spectrum from SpectrumCo. Verizon Wireless is a joint venture of Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD). SpectrumCo is jointly owned by Comcast Corp. (NASDAQ: CMCSA) and Time Warner Cable Inc. (NYSE: TWC) among others.
In addition to acquisition of broadband spectrum, the two parties have also agreed to a cross-licensing deal where the two cable providers would be able to bundle Verizon Wireless’ service and the wireless carrier would be able to sell the cable companies’ content in a bundle. The Wall Street Journal reports this morning that it is this part of the deal that is leading to the DoJ’s delay in approving the $3.9 billion sale.
The DoJ is concerned that the cross-marketing agreement effectively allows the companies to divide up coverage areas in a way that restricts competition and could lead consumers in some parts of the country at the mercy of a single provider. The chairman of the Federal Communications Commission, which must also approve the deal, is reportedly prepared to approve the deal even though the FCC shares some of the same concerns over the cross-marketing agreements as the DoJ.
Paul Ausick
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