FCC approves Verizon's purchase of cable industry airwaves

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The additional airwaves, known as spectrum, will help Verizon expand the capacity of its cellular network to meet the growing data demands of smartphones and tablet computers.

The deal also includes agreements that allow Verizon and the cable companies to sell each other's services. The arrangement will allow customers to buy the cable companies' services from Verizon Wireless stores and allow the cable companies to sell Verizon contracts as part of their packages.

FCC Chairman Julius Genachowski said the original deal "posed serious anti-competitive concerns and would not serve the public interest." But he decided to approve it after the companies agreed to a series of concessions.

Genachowski argued that the "substantially modified transaction" will give customers access to more spectrum for mobile broadband, while preserving competition.

To win over the FCC, Verizon committed to build-out its newly acquired spectrum to 30 percent of the covered population within three years and 70 percent of the population within seven years. The company also promised to follow the FCC's rules on data roaming for five years regardless of the outcome of a lawsuit it filed to overturn the rules.

To address concerns that it would monopolize the airwaves, Verizon agreed to auction-off some of its valuable spectrum. It will also sell some spectrum directly to T-Mobile, the smallest of the four national wireless carriers.

The Justice Department's settlement forbids Verizon from selling the cable companies' products in areas where it offers its own Internet and TV service, FiOS. Government officials said the condition would ensure that Verizon and the cable companies would continue to compete aggressively against each other.

The DOJ settlement revises the deal to allow the cable companies to sell the wireless services of Verizon's competitors in five years. The companies will also be allowed to resell Verizon's service under their own brands at any time.

The Republican commissioners, Robert McDowell and Ajit Pai, issued separate concurring opinions. Although they agreed that the deal should be approved, they criticized the Democratic commissioners for imposing the data roaming requirements on Verizon.

They also argued that the FCC lacks the legal authority to examine the cross-marketing agreements and should have focused solely on the spectrum sale while allowing the Justice Department to review other provisions. 

Verizon CEO Dan Mead said the deal represents a milestone for the industry.

“We will work aggressively to ensure that we put this previously unused spectrum to use quickly to benefit customers,” Mead said in a statement.

David Cohen, Comcast's executive vice president, said the deal will "promote innovation, investment, competition and consumer choice."

"As we said when the transaction was announced back in December 2011, this is a smart and efficient way for Comcast to deliver a broader array of wireless services, and is an efficient deployment of this spectrum," Cohen said.

But consumer advocacy groups expressed concern that the spectrum deal will allow Verizon, already the nation's largest wireless service provider, to consolidate its control over the airwaves. Critics also worried that the cross-marketing arrangements will restrict competition for Internet service.

Joel Kelsey, policy adviser for Free Press, said the conditions imposed by regulators addressed some of the most serious concerns, but that the deal will still allow companies to divide up the market. 

"Consumers would be far better off if this union had never been proposed," he said.

The Communications Workers of America, which lobbied aggressively against the deal, claimed the FCC's decision would eliminate jobs and lead to higher prices.

"It is clearly an example of the FCC, just as the Department of Justice did last week, acting on behalf of corporate interests, not the public interest and clearly not jobs," the union said.

A federal court must still sign off on the Justice Department's settlement with the companies, but that is considered a formality.