By Brendan Sasso - 03/21/12 09:58 PM EDT
At the hearing, Joel Kelsey, policy adviser for consumer group Free Press, said that collaborating with the cable industry would reduce Verizon's incentive to build out its own cable television and Internet business, FiOS.
Sen. Al Franken (D-Minn.) said he is "skeptical" about the deals.
"It's almost as if your companies got in a room together, and you agreed to throw in the towel and stop competing against each other," Franken said.
Verizon general counsel Randal Milch argued his company has made a "significant investment" in FiOS and they don't plan on abandoning it now. He added that Verizon never planned to expand FiOS beyond its current coverage area.
Critics also argued that the deal will allow Verizon, which is already the nation's largest wireless carrier, to consolidate its control over the airwaves.
Steven Berry, president and CEO of the Rural Cellular Association, testified that the spectrum deal would make it harder for smaller carriers to compete and would drive up prices for consumers.
Milch said the spectrum sale would help Verizon to serve the explosion of smartphones and tablet computers with a highspeed 4G network. He noted that the cable companies had no immediate plans to use their spectrum.
Kohl grilled Comcast executive vice president David Cohen over recent comments from a Comcast executive that the company "never" planned on using its spectrum. The FCC bars companies from warehousing or stockpiling spectrum without planning to use it.
Cohen said his company intended to launch its own wireless network when it bought the spectrum but realized in recent years that plan was not economically viable. He said the use of the word "never" was "unfortunate."
Cohen also defended his recent comments implying the cross-marketing agreement and spectrum sale were linked. He admitted the deals were negotiated at the same time and are "integrated," but he said they are not "contingent." Both Cohen and Verizon's Milch said they would move forward with either deal even if the other collapsed.
The companies have argued that the FCC does not have the authority to review the cross-marketing agreement because it is independent from the spectrum sale.
Franken asked Cohen about whether the cable companies gave other wireless carriers an opportunity to buy the spectrum. Cohen said Comcast had discussions with "virtually" every wireless carrier, including T-Mobile in 2010.
Charles Rule, an antitrust attorney who has worked at the Justice Department, testified the spectrum sale is unlikely to run afoul of antitrust law because the cable companies were not using the spectrum and are not direct competitors with Verizon's wireless business. He said the cross-marketing deals do not "knock my socks off," but are not unusual.
He said the companies' agreement to launch a project to research new technologies could lead to new innovations for consumers.
But Timothy Wu, a law professor at Columbia University and a former chairman of consumer group Free Press, said the deals should be analyzed through the lens of communications law and not antitrust law.
"Spectrum belongs to the public, and it is the government's role to make sure their asset is being used properly," Wu said.