Rivals to Verizon Wireless are urging U.S. communications regulators to block the company's multibillion dollar deals to buy wireless airwaves from cable operators, saying the transactions will hurt competition.
In letters released this week, rivals Sprint Nextel Corp, T-Mobile USA and MetroPCS Communications Inc expressed concerns about the spectrum transfer.
Deutsche Telekom AG's T-Mobile said in its letter to the Federal Communications Commission that the deals would result in an excessive concentration of spectrum holdings and are a defensive move to prevent smaller competitors from getting the airwaves.
No. 1 U.S. carrier Verizon Wireless announced plans on December 2 to pay Comcast Corp and Time Warner Cable Inc $3.6 billion in a spectrum and marketing deal. Verizon reached a similar deal with privately held cable operator Cox Communications, worth $315 million, which was announced in mid-December.
The FCC is reviewing whether the two deals are in the public's interest, while the U.S. Justice Department is probing the deal for any antitrust concerns.
Verizon Wireless, a joint venture of Verizon Communications Inc and Vodafone Group Plc, has said it needs more spectrum to support increased consumer demand for videos and other services that soak up bandwidth.
We believe the spectrum purchase is in the public interest, addressing consumer needs, and putting spectrum to work to meet growing demand for 4G services, Verizon spokesman Ed McFadden said in response to critics.
Wireless carriers have clamored for more airwaves to stave off a looming spectrum crunch. The growing use of wireless devices like Apple Inc's iPad tablet and Google Inc's suite of Android-powered smartphones has added to the urgency to find more airwaves.
AT&T abandoned its bid to buy T-Mobile after the Justice Department sued to block the deal. AT&T had said it needed the acquisition to get more wireless spectrum to support increasing demand for wireless data.
T-Mobile argued in its letter to the FCC that the spectrum purchase would not bring near-term benefits to Verizon Wireless, as the company already owns similar spectrum that it has not yet put to use.
Rather, the principal impact of the acquisition would be to foreclose the possibility that this spectrum could be acquired by smaller competitors, the company said.
The spectrum buy would be part of broader agreements to create a joint venture and allow the cable operators to resell Verizon's mobile service.
Opponents of the transactions say they would mean that companies that are rivals in some businesses, like cable and Internet, would become allies in the wireless business.
T-Mobile and MetroPCS said in their filings that the agency should deny Verizon's spectrum deals, and Sprint asked for a careful evaluation of all the implications.
The deals would result in widespread collaboration and cooperation between providers of the only two wireline ecosystems in vast parts of the country, Sprint said in its filing to the FCC.
Lawmakers are also scrutinizing the deals, although they have no official role in the review.
The Senate Judiciary subcommittee on antitrust, competition policy and consumer rights is holding a hearing on March 21 to consider whether the deals pose a threat to competition and consumers.
(Reporting By Jasmin Melvin; Editing by Tim Dobbyn)