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December 20, 2011

U.S. Justice Department May Be Investigating Verizon Wireless over Cable Spectrum Deal

By Ed Silverstein, TMCnet Contributor

Verizon (News - Alert) Wireless may be the target of an investigation by the antitrust division of the U.S. Justice Department, according to news reports.

Bloomberg News reports the issue focuses on Verizon’s possible deal involving cable spectrum that could result in a “restraint of trade” charge.

Verizon and a joint venture from major cable companies – called SpectrumCo – recently came up with a new scenario how Internet, mobile and pay-TV services will be purchased by consumers, Bloomberg adds.

Verizon Wireless (News - Alert) will pay the group of cable companies some $3.6 billion for wireless spectrum. Under the agreement, Verizon Wireless will pay Comcast Corp $2.3 billion; Time Warner (News - Alert) Cable will receive $1.1 billion; and Bright House Networks will receive $189 million, according to news reports. Bright House owns and operates U.S. cable systems, TMCnet said. But the deal does not end there.

“To accommodate the sale of various products and services, the linked companies have also formed commercial agreements that will deliver mobile products to consumers,” adds TMCnet’s Tammy Wolf in an explanation of the deal. “This means Verizon Wireless and the cable companies will become agents to sell one another’s products, and eventually, the cable companies will have the option to sell Verizon Wireless’ service on a wholesale basis. Moreover, an innovation technology joint venture between Verizon Wireless and the cable companies will back the development of technology to improve integration of wireless and wireless goods.”

The Verizon Wireless deal will need approval from U.S. regulators, such as the Federal Communications Commission (FCC (News - Alert)), according to news reports.

The deal also comes as consumers want more wireless service and increased bandwidth, TMCnet adds.

According to the Financial News Network Online, Verizon Wireless also entered into a recent spectrum deal with Cox (News - Alert) Communications.

Verizon Wireless is co-owned by Verizon Communications and Vodafone Group Plc. Verizon Wireless is the biggest mobile-phone carrier in the United States.

Ed Silverstein is a TMCnet contributor. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves
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