Justice approves Verizon Wireless-cable deal … with restrictions

As expected, the Justice Department has given Verizon (NYSE: VZ) FiOS a fighting chance against its cable competitors—whether it wants it or not.

In a ruling Thursday, the Justice Department's antitrust division said Verizon Wireless could spend $3.9 billion to buy unused wireless spectrum from four cable operators: the SpectrumCo group made up of Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC) and Bright House Networks, and Cox Communications.

DoJ also said, however, that the five could not work together in a planned venture where Verizon Wireless would peddle cable and broadband services from the cablecos in areas where FiOS is operating and the cable operators would push Verizon Wireless service to their subscribers.

Even in areas where the parties will be allowed to jointly market services, DoJ placed a five-year co-marketing limit, after which the companies must reapply to extend the deal. The conditions were applied after consumer groups, some elected officials and even Verizon's primary union, the Communications Workers of America (CWA) complained that the relationship between what should be two competitors was far too cozy and would damage competition now percolating via FiOS.

The wireless spectrum sale was never considered that controversial; in fact it was thought to be a good thing for all the involved parties and consumers. The cablecos bought the airwaves once upon a time when they were considering getting into the mobile business. When they decided that wasn't going to happen, they put them up for sale and Verizon Wireless, which continually claims it needs more spectrum, snapped them up.

Even the spectrum sale, though, had its moments of drama. The FCC said a major reason it was OK with the deal is that Verizon Wireless has agreed to sell some spectrum to T-Mobile USA, which, itself, is said to be in dire need of spectrum. Verizon is also expected to sell off another spectrum band.

For more:
- see FierceCable's coverage
- the Associated Press has this story

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