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August 16, 2012

Department of Justice Limits Verizon's Cable Agency Agreements

By Gary Kim, Contributing Editor

The U.S. Department of Justice has approved the Verizon purchase of spectrum from Comcast, Time Warner (News - Alert) Cable, Cox Communications and Bright House Networks, contingent on a revision of the agency cross marketing agreements the firms originally had wanted.

The agreements, as originally structured, would have required Verizon Wireless (News - Alert) to sell the cable companies’ services on an “equivalent basis” with FiOS where FiOS is available, thereby reducing Verizon’s ability and incentive to sell its own services aggressively, DoJ says. 

That might strike you as odd. Why would Verizon Wireless agree to sell cable products “on an equivalent basis” with Verizon fixed network products? Perhaps because the cable companies were barred from selling wireless products other than Verizon Wireless. 

The settlement forbids Verizon Wireless from selling cable company products in FiOS (News - Alert) areas the Department of Justice says. On the other hand, cable companies can sell Verizon products wherever they operate. 

The effort is to prevent Verizon from selling cable high speed access services as a substitute for upgrading its own networks. 

In addition, under the proposed settlement, Verizon Wireless’ ability to resell the cable companies’ services to customers in areas where Verizon sells DSL Internet service ends in December of 2016. 

Finally, the proposed settlement limits the duration of the technology joint venture and other features of the agreements, ensuring that the agreements will not dampen the companies’ incentives to compete against one another going forward.

Verizon retains the ability to sell bundles of services that include DSL, Verizon Wireless and the video services of a direct broadcast satellite company (DirecTV (News - Alert) or Dish Network);

After five years, the cable companies are no longer barred from selling the wireless services of Verizon Wireless’ competitors and may partner with other wireless providers.The cable companies can then elect to resell Verizon Wireless services using their own brand at any time.

Upon dissolution of the technology joint venture, all members receive a non-exclusive license to all the joint venture’s technology and each may then choose to sublicense to other competitors.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2012, taking place Oct. 2-5, in Austin, TX.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.



Edited by Jamie Epstein
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