Democrats worry Verizon-cable deal will limit competition

By Brendan Sasso - 07/09/12 04:55 PM ET

A group of 32 House Democrats urged federal regulators on Monday to take a hard look at Verizon's proposed deal with cable companies, warning the deal could discourage competition between phone and cable companies.

Verizon has 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 and to launch a joint-research venture.

But in a letter to the Federal Communications Commission (FCC) and the Justice Department, the Democrats warned the deal could undermine the 1996 Telecommunications Act, which was intended to encourage competition between the cable and phone industries.

They said the marketing agreements appear to limit competition for services including video, Internet, voice and wireless access.

"This could lead to reduced investment in infrastructure, job loss, fewer choices, and ultimately higher prices for consumers," the Democrats wrote.

They worried that by striking agreements with cable companies, Verizon has lost its incentive to build out its own cable and Internet service, FiOS

"This would leave many of the communities that we represent on the wrong side of the digital divide," the lawmakers wrote, saying low-income and minority communities are the most likely to be affected.

Verizon argues that it never planned to expand FiOS beyond its current footprint. The company says the spectrum deal will allow it to improve the quality of its network and that the marketing agreements will increase consumer choice.

"Verizon Wireless is confident that we have made a persuasive case that purchasing and bringing unused spectrum into the marketplace to meet the communications needs of millions of consumers is strongly in the public interest," a company spokesman said in a statement.

The Democrats signing the letter were Reps. Louise Slaughter (N.Y.), Jerrold Nadler (N.Y.), Brian Higgins (N.Y.), Robert Andrews (N.J.), Timothy Bishop (N.Y.), Robert Brady (Pa.), Bruce Braley (Iowa), William Lacy Clay (Mo.), Emanuel Cleaver (Mo.), Peter DeFazio (Ore.), Donna Edwards (Md.), Keith Ellison (Minn.), Sam Farr (Calif.), Bob Filner (Calif.), Janice Hahn (Calif.), Maurice Hinchey (N.Y.), Dennis Kucinich (Ohio), Barbara Lee (Calif.), Nita Lowey (N.Y.), Carolyn Maloney (N.Y.), Michael Michaud (Maine), Chellie Pingree (Maine), Nick Rahall (D-W.Va.), Charles Rangel (N.Y.), Lucille Roybal-Allard (Calif.), John Sarbanes (Md.), Janice Schakowsky (Ill.), Jose Serrano (N.Y.), Pete Stark (Calif.), Niki Tsongas (Mass.), Nydia Velazquez (N.Y.) and Lynn Woolsey (Calif.)