By Brendan Sasso - 06/25/12 02:30 PM EDT
By selling some spectrum to T-Mobile, the smallest national carrier, Verizon could boost its hopes of winning regulatory approval for its $3.6 billion deal with the cable companies.
The Verizon-cable deal includes both a sale of spectrum from the cable companies to Verizon and separate marketing arrangements that will allow the companies to cross-sell each other's services.
The Federal Communications Commission (FCC) and the Justice Department are currently investigating whether the Verizon-cable deal would harm competition.
T-Mobile had been one of the most outspoken critics of the deal, warning that it would allow Verizon to dominate the wireless market.
"Prior to these divestitures, we believed the transaction represented an unfair concentration of spectrum in the hands of the nation’s largest wireless carrier," a T-Mobile spokeswoman said. "The significant spectrum divestitures by Verizon announced today are good for competition and consumers."
Public Knowledge, an advocacy group opposed to the Verizon-cable deal, accused Verizon of buying off T-Mobile.
"That Verizon Wireless feels the need to buy off T-Mobile to close its spectrum/marketing deals with the country's largest cable operators underscores just how bad this deal really is for American consumers and competition generally," said Harold Feld, senior vice president of Public Knowledge, in a statement.
He argued that the real competitive concern of the Verizon-cable deal is not the spectrum sale, but the marketing arrangements. He said Monday's announcement does nothing to address the "cozy, cartel-like arrangements" of the Verizon-cable deal.
Both Verizon and T-Mobile said Monday's announcement will allow them to improve the quality of their networks to provide better service to their customers.
The announcement was Verizon's latest attempt at enticing regulators into approving its deal with the cable companies. In April, Verizon said it would sell off a separate block of spectrum to the highest bidder if regulators approved the deal.