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Signs that Verizon/cable deal is in trouble

17 May, 2012

Based on the number of letters sent to and about Verizon, its cable deal is in considerable trouble. Take three recent ones:

The FCC's Chief of Wireless Division, Rick Kaplan, sent a letter to Verizon's attorneys containing some pretty pointed questions, that bear on the company's announced cable partnerships. Kaplan wanted to know about the company's plans for the spectrum it won in a 2008 auction. Specifically, had Verizon taken any steps to fulfill its promise at auction to build out a 700 MHz network? And, Kaplan wanted to know about Verizon's plans to sell this currently unused spectrum. He gave the company until May 22 to provide detailed answers.

One day later, sometime Verizon partner DIRECTV filed a letter with the FCC voicing its concern over Verizon's plan to discontinue standalone DSL this coming June. DIRECTV pointed out that they and Verizon had resold each others' products for years, but Verizon's move puts burden on DIRECTV. As DIRECTV wrote, Verizon:

"... effectively imposed a substantial price increase upon every prospective subscriber of the DIRECTV/DSL bundle, especially those who prefer to use a wireless or voice over Internet protocol provider for primary telephony services. It thereby made this bundle less competitive to those offered by its new cable partners."

And then there's Herb Kohl, chairman of the Senate antitrust subcommittee who, a day later, sent a letter to Verizon's general counsel, Randall Milch. Kohl was even more vehement about Verizon's discontinuation of standalone DSL, focusing on the "potential harm to both competition and consumers." Kohl all but accused Verizon of hypocrisy:

"It appears inconsistent for Verizon to argue, on the one hand, that the joint marketing arrangements and bundling wireless services with cable offerings increases customer choice, while on the other hand the company is tying voice and DSL services, compelling consumers to purchase bundled offerings."

Verizon and its cable partners, meanwhile, are acting as though they're immune to criticism. As the FCC and the DOJ are reviewing the deal, and the letters opposing it pour in, "Comcast, Time Warner Cable and Cox are already pitching promotions that offer subscribers prepaid debit cards if they order new bundles from the cable MSOs and Verizon Wireless."


FCC Wireless Division letter to Verizon (May 15, 2012)

FCC bureau chief has questions for Verizon (The Hill, May 15, 2012)

DIRECTV letter to FCC (May 16, 2012)

Kohl letter to Verizon (May 17, 2012)

Verizon ends standalone DSL service, requires landline bundle (, May 17, 2012)

DirecTV accuses Verizon of 'abandoning initiatives that would compete with cable'
(, May 16, 2012)


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