Another Power Grab

Media Minutes for March 23, 2012
Producer: Stevie Converse, Megan Tady, Candace Clement

Verizon has joined forces with a cadre of cable companies, including Comcast, Time Warner Cable and Cox, in a controversial deal that would divide up the broadband market.

Verizon is vying to buy $3.6 billion in unused spectrum from the cable companies to expand its own network. Giving up the spectrum means cable companies will back away from investing in the wireless market. In return, Verizon has agreed to lay off of cable companies' turf by not building out residential broadband fiber networks.

Josh Levy, the Internet campaign director for Free Press, said the companies should be rivals, but instead are helping each other corner their respective markets.

Josh Levy: Verizon won't compete with the cable companies anymore, and the cable companies won't compete with Verizon anymore. It's kind of like the five families in The Godfather getting together and dividing up territory. This is pretty much what Verizon and these cable companies have done.

In addition, the companies have proposed a cross-marketing agreement to sell each other's services to their customers, further solidifying their dominance. Verizon is already the leading wireless provider in the country.

Levy said the deal is bad news for the public because it would stifle competition.

Josh Levy: If you live in a community that has one cable broadband provider and you've been hoping that a company like Verizon would come in and build a high-speed fiber optic network, your hopes are going to be dashed. It's not going to do that anymore. You are going to be stuck with that cable provider. And that cable provider might not be willing to build out into underserved areas. It might not be willing to provide prices that are affordable to all residents. And so a lot of people who have been stuck with inadequate access or no access are still going to be stuck.

The deal has already raised eyebrows in Congress. The Senate Antitrust Subcommittee held a hearing this week to discuss the deal. And the Federal Communications Commission asked the companies to submit further details on the arrangement.

Levy said public outrage is growing against the deal.

Josh Levy: Big broadband companies like Verizon, like AT&T in the past, rather than try to innovate and serve customers through better service and better prices, instead make these power grabs. They can own even more of the market, charge us even more and get around the need to provide better service and greater choice.