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Cable Technology Feature Article

March 21, 2012

Opponents Fight Verizon's Cross-Marketing Deal with Cable Giants

By Beecher Tuttle, TMCnet Contributor

Later today, Verizon (News - Alert) and a trio of cable companies will make their case before a congressional panel that their cross-marketing deal won’t impede competition or negatively affect consumers.

The Senate Judiciary subcommittee on antitrust, competition policy and consumer rights will take an in-depth look at the Verizon's $3.6 billion acquisition of wireless spectrum from Comcast (News - Alert), Time Warner Cable and Bright House Networks, including a provision that allows Verizon and the cable companies to cross-promote and resell each other's products as part of bundle packages and eventually as wholesale services.

Opponents of the deal have less of a problem with the spectrum allocation and more concern with the cross-marketing deal, which some have claimed will give Verizon reason to ignore its FiOS (News - Alert) Internet and television service. Though it would essentially hand the market over to cable companies, which rarely compete in the same area, others have argued that the deal would also stunt innovation and discourage companies from pushing their broadband network beyond its current footprint.

“The cutthroat competitive environment that pushes innovation forward and forces companies to continually invest in better products and services is born from companies doing everything they can to steal away their competitors’ customers, not by offering to sign up your own customers for rivals’ services,” said the Washington Post of what Joel Kelsey, policy adviser at public interest group Free Press, may testify to later today.

The Communications Workers of America and the International Brotherhood of Electrical Workers issued a joint statement yesterday, arguing that the deal would create an "unchecked monopoly by the nation’s largest cable and wireless companies."

Verizon vehemently disagrees with the accusations, noting it has every incentive to compete with cable companies as vigorously as it has in the past. The firm might also argue that federal regulatory bodies have no right to rule over cross-marketing deals, and should only look into the spectrum sale.

Verizon and cable companies also plan on stressing the benefits of the deal to consumers, including the ability to sign up for bundle packages even if one of the services isn't offered in their area by their main provider.

"The harms that have been alleged are hypothetical and speculative, and opponents of the transactions – several of which are competitors that simply fear increased competition – ignore the benefits the transactions will bring to consumers," Comcast executive vice president David Cohen, will say later today, according to the Post.

The hearing, titled, "The Verizon/Cable Deals: Harmless Collaboration or a Threat to Competition and Consumers?" kicks off this afternoon.

Edited by Braden Becker

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