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Why the Verizon-Cable Agreement is in the Public Interest

 

The evidence below shows the Verizon-Cable agreement is clearly in the public interest, if the FCC fairly reviews the agreement and all of the relevant facts, in the full context of the highly competitive wireless ecosystem.

Top Reasons Why Verizon-Cable Agreement is in the Public Interest

Increases competition: The agreement increases competition because it enables:

 

  • Comcast, Time Warner Cable and Bright House Networks to most competitively, economically and efficiently offer wireless service to their customers for the first time as part of a bundle of their existing services; this agreement also enables and encourages Comcast to economically offer consumers a new competitive video entertainment choice, Xfinity Streampix, over Verizon Wireless devices; and
  • Verizon wireless to most competitively, economically, and efficiently offer a new competitive full wireless/cable service bundle to its wireless customers where Verizon geographically does not have a cable, DSL or FIOS offering. The agreement also encouraged Verizon to invest in a new joint venture with Coinstar-Redbox to offer value-conscious consumers yet another video entertainment competitive choice.
    • [Update: Verizon announced it will offer nationwide a new fixed wireless broadband service using its new 4G LTE network, that in rural or hard to serve areas, will provide a new competitive broadband alternative to cable, AT&T, Sprint, T-Mobile and rural celluar carriers.]

 

Thus this agreement substantially increases competition by economically enabling multiple new competitive entrants to enter new markets with new product or marketing capabilities, that would not be economic, but for this agreement. Increasing competition is clearly in the public interest.

Fastest utilization of unused spectrum: This agreement puts valuable unused spectrum to use in the marketplace, in the quickest and most efficient manner possible, via a private auction process that allocated the spectrum to its highest and best use, (like Congress' recently reaffirmed policy in law, which requires auction of spectrum in order to ensure it finds its best and highest use.) Moreover, Verizon has a well-established track record of putting the spectrum it acquires to use nationally exceptionally quickly. Putting unused spectrum to use most quickly and broadly is clearly in the public interest.

Optimizes use of the spectrum: This agreement moves some of the most valuable unused spectrum available for commercial use, from a place where there are no plans to put it to use in the marketplace, to Verizon a place that arguably can put it to maximal use faster than most any provider other than AT&T. Optimizing the use of very scarce spectrum in the marketplace is clearly in the public interest.

Best serves most customers: As the largest wireless carrier, with 109m subscribers, this cable spectrum sale to Verizon will facilitate fast and reliable 4G Verizon service to handle the exploding bandwidth demand for video streaming and video chat. Enabling the greatest number of American wireless users to enjoy the spectrum capacity necessary to fully benefit from 4G LTE speeds -- is clearly in the public interest. Preventing a company from competitively securing the spectrum it needs -- to maintain customer quality of service and user satisfaction in the face of exploding bandwidth demand -- would not be in the public interest.

Fuels growth and facilitates maximum economic activity: Allowing this spectrum transfer would fuel subscriber and usage growth for the largest block of American customers, which is clearly in the public interest.

Blocking this agreement for some reason, in order to prevent spectrum from reaching its best and highest use via private auction, based on the notion it somehow would concentrate too much spectrum, would effectively be: an arbitrary FCC de facto growth cap on Verizon's business; a de facto regulatory penalty for competitively winning the most customers in the marketplace; and a de facto success tax on Verizon for succeeding exactly like our market system wants and expects.

Starving marketplace winners to redistribute competitive opportunity to market place losers is contrary to the national communications policy of promoting competition, and not in the public interest.

Real problem is Government-created spectrum crunch: It is the Federal Government's fault that there is insufficient spectrum to keep up with consumer demand. It is not Verizon's fault that the government has a dysfunctional constipated process for making more wireless spectrum available for commercial use. Verizon has a real and demonstrated need for more wireless spectrum now, given that it has more actual subscribers per available Mhz on its network than any other national carrier.

It is in the public interest to allow spectrum to reach its highest and best use for the most consumers now and in the future. It would not be in the public interest to punish Verizon and the Cable sellers of wireless spectrum for the Government's inefficiency and ineffectiveness in addressing this long-known serious public policy problem.

New law affirms spectrum auction policy: At core the new spectrum legislation just signed into law affirmed that market auctions are the best and most efficient manner for allocating spectrum. This Verizon-Cable spectrum sale is most definitely the result of an effective private auction where the cable owners decided to sell the spectrum to the market entity that paid the most. Just this month the Congress put into law policy directives and limits for the FCC that effectively made it clear that auctioning spectrum to the highest bidder, explicitly for public auctions, and implicitly for private secondary market auctions, were in the public interest. Flouting Congress's recent policy direction would not be in the public interest.

In sum, if the FCC fairly reviews the agreement and all of the relevant facts in the full context of the highly competitive wireless ecosystem, and if the FCC factors in the clear policy guidance the Congress just gave the FCC in law just this month, this agreement will be found to be in the public interest.

So what is really going on here? Why are the same interest groups that most strongly pushed for Title II reclassification of broadband, the FCC's highly controversial, unwarranted, and unjustified Open Internet Order, and for the FCC to block the AT&T-T-Mobile merger, also similarly opposed to this $3.6b Verizon cable agreement, which is just one tenth the size of the ~$39b AT&T-T-Mobile transaction? One would hope it is not punishment or coercion, because Verizon has exercised its constitutional rights to challenge in court whether the FCC has the statutory authority to promulgate the Data Roaming Order or the Open Internet Order?

It clearly would not be in the public interest for the FCC to thwart the Congress' latest policy directive to the FCC that any spectrum screen be applied in an industry-wide rulemaking and not in a transaction setting, or for the FCC to deny Verizon its due process under the United States Constitution for challenging the FCC's orders in court.

Simply, the public interest always must respect the boundaries of the rule of law and the United States Constitution.

See: Why Verizon-Cable Agreement Increases Competition

 

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