By Andrew Feinberg - 05/24/12 07:08 PM EDT
Verizon wants to buy the airwaves to improve service for its 4G network for smartphones. But public interest advocates fear the deal will harm competition by putting too much of the airwaves into Verizon's hands.
Both the Justice Department and Federal Communications Commission's antitrust divisions must sign off on the $3.6 billion deal, which would involve Verizon buying spectrum from cable giants Bright House Networks, Comcast and Time Warner Cable.
Lee said regulators must analyze the spectrum deal "in light of the increasingly severe spectrum crunch facing the wireless industry and consumers of wireless services."
Verizon claims that there is a massive shortage of spectrum affecting the country. But T-Mobile and other carriers say Verizon uses its spectrum inefficiently, and point to the fact that Verizon has offered to sell licenses for spectrum in the 700Mhz range if the deal to purchase the cable providers’ spectrum is approved.
"A robust secondary market for spectrum is essential to the public interest in efficient spectrum allocation," Lee writes, "and to continuing competition in the wireless industry."
Lee also writes that the FCC's spectrum screen, which limits how much spectrum a company can own in any given area, should protect Verizon's competitors.
Lee added that "accusations that Verizon is simply seeking to keep spectrum away from its competitors appear to lack credibility.”
"Senator Lee thoroughly reviewed the record, listened to all perspectives presented at the hearing, and has come to the conclusion that these transactions are pro-competitive and in the interest of American consumers," Verizon executive vice president Tom Tauke said in a statement. "We appreciate his detailed analysis of the facts presented, which will be important input for the Department of Justice and the FCC as they complete their own reviews. It also provides further evidence that these transactions are on track for approval this summer."
The proposed deal would also create joint marketing agreements allowing Verizon and the cable companies to market and sell one another’s products and services. Lee rebuffed complaints from public interest groups that the arrangement would create an anti-competitive cartel and that Verizon will not continue to push its own FiOs network as a competitor to cable.
The Utah senator said such fears were purely “speculative” and “likely overstate the effects of the agreement,” on Verizon’s desire to expand the FiOS network.
"Critics who oppose this transaction based on concerns about the future of FiOS ignore business realities beyond the legitimate purpose of antitrust law," Lee said, since the transaction "will not produce meaningful anticompetitive effects."
"Regulators have no basis on which to mandate that a private entity take action to bring about some conceptual vision of ideal market competition," he said. "Nothing obligates [Verizon] to compete in additional cable markets."
Updated at 3:19 p.m.