Lee: Verizon/Cable Deal Appears Procompetitive and Likely to Benefit Consumers

May 24, 2012

WASHINGTON – Today, Senator Mike Lee sent a letter to the Department of Justice and Federal Communications Commission regarding the recent deal between Verizon Wireless and several cable companies.  The agreements include the transfer of wireless spectrum to Verizon, cross-marketing arrangements between the companies, a joint research and development project, and a future option for the cable companies to create their own wireless offering using Verizon’s network capabilities.

"Vigorous competition is essential to consumer welfare in the wireless and cable markets,” said Senator Lee.  “Based on available evidence, I do not believe the spectrum purchase or commercial agreements will restrict competition or otherwise harm consumers.  To the contrary, the evidence suggests that these agreements are primarily procompetitive and will benefit consumers by putting previously fallow spectrum to efficient use, expanding consumer choice through the introduction of a new bundled offering, and spurring innovation in the development of new technologies and products.”

Senator Lee noted that “the spectrum Verizon seeks to purchase has not been in use since it was last transferred in 2006, and it is undisputed that Verizon employs spectrum productively and efficiently.  The proposed transaction thus creates an obvious efficiency and is, at its most fundamental level, procompetitive.” 

Regarding the companies’ cross-selling agreement, Senator Lee noted that “collaboration among competitors is essential to a vibrant economy,” and that Verizon Communications Inc.’s “overwhelming economic incentives obviate any realistic possibility of a collusive agreement between FiOS and the cable companies to stand down.” 

With respect to the parties’ joint research and development project, Senator Lee stated that “joint ventures often produce procompetitive effects,” and noted that “the parties’ joint operating entity, which seeks to develop new and innovative technologies, is procompetitive on its face.”

Senator Lee concluded by observing: “Although antitrust law is by its very nature forward looking, unmoored speculation must not be allowed to overtake rational economic analysis.  Government may sometimes have a proper role in ensuring that businesses compete fairly and do not collude.  But it is improper for government agencies to pick winners and losers in the marketplace or to interfere with private enterprise where robust market forces are in operation.”