Democrats worry Verizon-cable deal could undermine Telecom Act

By Brendan Sasso - 06/13/12 02:40 PM ET

A group of Democrats, led by Reps. Edward Markey (Mass.) and John Conyers Jr. (Mich.), urged federal regulators on Wednesday to take a hard look at Verizon's proposed deal with a group of cable companies, warning the deal could undermine the 1996 Telecommunications Act.

The Democrats, some of whom helped write the 1996 law, said the goal of the legislation was to promote competition between cable and telephone companies.

"To fulfill the purpose and promise of the Act, it is essential that competition and consumer choice continue to animate our nation's communications policies," the lawmakers wrote in letters to the Justice Department and the Federal Communications Commission (FCC), which are both reviewing the deal.

Massachusetts Democratic Reps. Barney Frank, John Olver, John Tierney, Stephen Lynch and Niki Tsongas also signed the letter.

Verizon agreed to pay $3.6 billion to acquire a block of radio spectrum from cable companies including Comcast and Time Warner. The companies also agreed to cross-sell each other's services.

The lawmakers worried that part of the reason Verizon bought the spectrum was to close off its competitors' access to it. Spectrum is a limited resource that all wireless devices use to transmit signals.

The Democrats urged the regulators to scrutinize the deal while "taking into consideration the pro-consumer, pro-competition provisions enshrined in the '96 Act."

In a separate letter on Wednesday, Sen. Scott Brown (R-Mass.) asked Attorney General Eric Holder to carefully consider whether the marketing arrangements will stifle competition. He worried that the deal will discourage Verizon from expanding its high-speed cable service FiOS to areas of Massachusetts that do not already have it.

Verizon says it had no plans to expand FiOS beyond its current size even without the cable deal. The company also argues that the spectrum deal will allow it to increase the capacity of its wireless network.

"We understand that policymakers have questions about this transaction, and as this review process continues on schedule, we have sought to address them in the appropriate forums," a Verizon spokesman said. "Verizon Wireless have made a strong case that our purchase of unused spectrum and putting it to use for consumers in what is a highly competitive wireless marketplace is in the public interest."