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Video: Verizon/Cable Deals: Harmless Collaboration or Threat to Competition

http://www.phillipdampier.com/video/Senate Hearing on Verizon-Comcast Deal 3-21-12.flv

This afternoon, the U.S. Senate’s Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing on the potential antitrust implications of a deal between Verizon and some of the nation’s largest cable companies that would deliver Verizon warehoused, unused wireless spectrum owned by four of the nation’s largest cable operators and open the door to Verizon Wireless pitching cable television subscriptions.  The hearing: “The Verizon/Cable Deals: Harmless Collaboration or a Threat to Competition and Consumers?” lasts 2 hours, 23 minutes.

Currently there are 9 comments on this Article:

  1. Scott says:

    This is definitely a threat to competition, the playing field isn’t fair and the players are just dividing up the territories and services amongst themselves.

    Both AT&T Verizon knows that 4g service is the future as long as they pay politicians to keep the FCC’s hands off it, keep it unregulated, and charge through the nose with per-Gig fee’s and any other metered or tacked on charges they can think of.

    If that means giving up their landline broadband, even their fiber, so be-it.. the upside on their unregulated market vs a regulated one is so much greater for the ability to squeeze profits out of it.

    The 2nd problem is Wall St., wall street doesn’t want more than the 2 players AT&T and Verizon in the game, heck if it were up to them they’d prefer just 1 company owning the entire cellular market, but at least 2 makes it seem like there’s competition. As long as there’s a duopoly going matching each others pricing at the max consumers are willing to tolerate they can continue to maximize profits and returns for investors. I

    They have no interest or desire to invest in any other company besides those two, investing in Sprint, T-Mobile, or Cable Companies that have spectrum and need more capital investment would only increase competition, improve those services, and drive down cellular plan pricing to competitive prices to almost half of what Americans currently pay to AT&T/Verizon.

    Competition is bad for profits.

    The Cable Companies would be great triple-play competitors offering TV/Internet/Cellular, but faced with big players like AT&T and Verizon will billions to throw at attacking them in the market, it makes more sense for them to acquiesce to Verizon’s bullying taking a fat check for their spectrum and getting the assurance that Verizon will mutually agree to not compete with their Cable services. Verizon in return gets to concentrate fully on their 4g build-out with much higher ROI than landlines and Fiber would ever return to them.

    Essentially a win for all companies involved as their ‘exclusive’ markets are protected from competition with a gentlemans agreement, everyone gets paid, and everyone is guaranteed to make even more money in the future.

    Oh except consumers are guaranteed to pay more in the future…

  2. Tony says:

    C- Beneficial collaboration. 3 new MVNO’s enter the market that previously weren’t there and whom had no intention of launching their own networks before now. FiOS rollout is over. Verizon is actively selling arms of it. They’re done in that space. As an entire corporate entity (VZ Communications + VZ Wireless), their focus is very clearly on enterprise services with their hardline services (corporate) and wireless for retail. MVNO’s are often cheaper than the parent network, the caveat being you supply the device… easy to do with it being Verizon.

    So how isn’t this good? There’s going to be more service providers in wireless, where before this was going to remain unused space. There’s going to be another avenue to obtain TV and home TV service, where before the parent company had shelved, and even sold parts of, their similar service…

    Win/Win.

    • The problem with MVNO’s is the wholesale pricing and access rules set by their suppliers. They are both carefully calculated to ensure no reseller can challenge the parent provider. The prepaid space is where most MVNO’s seem to survive, but notice they are no real competitive threat to the companies that supply the service, and a lot of MVNOs not affiliated with Sprint, TMO, Verizon or AT&T are finding the market increasingly unprofitable.

      The real problem here frankly is Wall Street which absolutely loathes capital spending. If Verizon stood their ground more strongly over FiOS deployment, a lot more service areas would have fiber to the home service today, but investment in network upgrades always kills the stock price. Instead, we have talk of these “partnerships” which are really just reseller agreements that require no capital investment. Verizon pitching Comcast or Time Warner nets them a quick shot of $200 referral bonuses which look great on the quarterly financial report, but delivers nothing in the long term except the certainty the cable company will not get into the wireless space.

      These quick fixes remind me of the independent phone companies. Their “triple play” is most often phone, DSL, and reselling Dish or DirecTV.

      It’s the same phony competition Canada endures from prepaid MVNOs that are almost always owned and operated by the companies that provide the infrastructure. Consumers think they are choosing from competing providers when they actually are not.

      Canada has the right idea opening their market space up to foreign-owned providers who will front sufficient capital to build networks while domestic providers are scared away by investment banks and home grown investors.

      Mexico’s Carlos Slim, who owns Tracfone, is probably going to be the first foreigner to push into the U.S. market since Deutsche Telekom’s T-Mobile.

      I agree with your assessment the landline business is increasingly focused on enterprise customers and wireless for consumers (where the ARPU potential is enormous). But landline providers could still play an important part of the consumer market if they’d invest in their networks. Consumers will learn real fast wireless broadband will not replace wired service for years to come. It’s often slower, subject to more congestion, and resource-limited.

      I still have clueless people drop by here and tell me fiber to the home is dead because WiMAX is here. Seriously. Even providers in the city of Moscow consider WiMAX deader than Stalin and are hot-switching to LTE sometime this year.

      • Scott says:

        The other thing I hate with the MVNO’s is because they’re bound with their agreements to AT&T, Sprint, Verizon, etc.. while they may announce a great innovative service plans with low pricing, or unlimited data.. at any point when it gets popular their provider simply changes terms on them requiring them to raise pricing, or drop unlimited and go with a metered per Gb at the same or higher price than the provider.

        We;ve got several new Cellular companies announcing service now too that are piggybacking on Sprint and their WiMax network for cellular.. and I totally agree that’s a deadend just based on limited coverage let alone all the other negatives.

        WiMax is just as dumb as the WiFi Access point deployment hype that preceded it by companies making huge buys of equipment to build out Wifi networks that never had the range, speeds, or transmission through obstructions necessary to be remotely useful outside a Starbucks. It’s never been the right technology, and never been the right time.

  3. Duffin says:

    I wanted to toss my monitor out of the window every single time Cohen claimed that they’d offered the spectrum to every other carrier. That’s such bull. You don’t think there would be a feeding frenzy for that spectrum? He really expects us to believe that only Verizon, the carrier with the most spectrum, was the only one who was interested in it? This is AT&T/T-Mobile all over again! Do they think we’re stupid or something? Yeah, of course it’s very convenient that there’s no public proof of these “offers” to other carriers. They should not be able to sell this to another company. If a company doesn’t want spectrum, which is a finite resource, they shouldn’t be allowed to sell it themselves, it should be required to go to public auction first and then the selling company can get some proceeds from whoever wins the bid at that point.

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