Verizon Wireless has got clearance from the Department of Justice for its cableco deal, with some concessions. It still needs an FCC green light for the spectrum aspects of the multifaceted agreements, but this is now highly likely to happen soon.
Under the $3.9bn deal, Verizon significantly boosts its holdings of LTE-suitable AWS frequencies, though some of them will be then be included in a separate spectrum swap with T-Mobile USA. That agreement was one of the major compromises which sweetened the cable proposal because it puts TMo in a far stronger position to be competitive in 4G.
Meanwhile, as well as buying the licences from SpectrumCo (a venture of Comcast, Time Warner and BrightHouse) plus Cox, Verizon will engage in cross-marketing pacts with its new friends, while they will offer wireless services using its networks, defecting from previous ties to Clearwire and Sprint.
The cross-selling was the aspect which attracted most concern from consumer groups and the DoJ. The antitrust agency said joint marketing agreements between the companies would have lessened their incentives to compete aggressively in areas where they offer rival broadband, TV and quad play services. As a condition of approving the proposals, the DoJ insists that the partners limit the scope and duration of those cross-marketing arrangements.
Apparently, Verizon and the cable operators (Comcast, Time Warner, BrightHouse and Cox) will agree to limit the length of their proposed ventures to five years or fewer, and then would have to reapply for antitrust approval, giving them a powerful incentive to behave competitively in the meantime. Also, it is likely that Verizon will not be able to resell Comcast services in areas where it sells its own FiOS broadband and video offering, addressing fears that the firms would effectively stop competing with one another in some markets. The partners have already started cross-marketing some services, but not in overlapping territories.
FCC chairman Julius Genachowski said in a statement: “I believe the commission should now approve this transaction, and I will be circulating a draft order to my colleagues that would do so.”
As well as the spectrum implications and the boost to Verizon’s LTE ambitions, the marketing aspects of the pact also highlight how the operator is becoming more reliant on video in its business model. Highlighting this, it has extended its Viewdini mobile application, which searches for video from many sources including some of its new partners, such as Comcast. The app was originally launched for LTE/Android, and that version remains exclusive to Verizon, but it has also released an iOS variant, which will work on any US mobile network.
The free Viewdini product is powered by CBS Interactive’s TV.com, and aggregates movies, television and digital programming from providers including ABC, Comcast Xfinity, Hulu Plus, mSpot and Netflix. Users can search by title, topic or star, and click to access related information or links to similar videos.
Another would-be quad play giant, Dish Network, is facing a longer wait to overcome obstacles to its plans for a national LTE-Advanced network in its mobile satellite spectrum, However, it indicates that will not stop it going ahead with its own national broadband offering, based on proprietary satellite systems. According to The Wall Street Journal, which cited unnamed sources, this network will be available by the end of 2012. It will run off a new satellite recently launched by Dish’s sister company EchoStar, and will be formally unveiled in late September.
Of course, this service will not offer the kind of speeds or services which Dish hopes to provide with its LTE-Advanced roadmap. It will deliver about 5Mbps peaks and will target the traditional satellite communications homeland of rural access. Dish already offers such services through an alliance with ViaSat, but only in certain parts of the US, mainly areas east of the Mississippi River and the West Coast.
Dish is growing impatient of waiting for FCC approval for its plans in S-band spectrum, and seems to think that the more active it is in planning real world offerings, the more seriously it will be taken (many observers still believe Dish’s real game is to trade the spectrum later for a profit). Recently, Dish chairman Charlie Ergen said that the firm would push ahead with handsets which use the satellite element of the S-band network, even before it is cleared to support terrestrial-only signals, as it hopes ‘ the option of non-satellite devices offers a far stronger business case with cheaper, more standardized phones.
However, Dish is still likely to need a partner for its LTE venture, if it does get the FCC waiver it seeks, and has already been linked with Clearwire. Ergen said in a recent interview: “The only problem I see with the time that has gone by is that it’s become increasingly risky for us to try to go it alone,” he told the Denver Business Journal. “That process takes more than three years, and there’s not any way to make that go faster, so we’re probably going to lose that time-to-market advantage, because while we’re handcuffed, AT&T and Verizon are continuing to plan and put in ways they can build that out before we can get there.”
He continued: ‘The question we get is, ‘When is the FCC going to approve your application?’ And we don’t know that. We can’t go place an order to go build $1bn worth of radios until we know what frequencies to use. We don’t know that today.’ That means it is ‘more increasingly unlikely that we would be able to build a network from scratch ourselves,” he concluded. “I think we had all our options open if we had gotten it done by the first of the year… We’re still cautiously optimistic that we can enter the business and create a great product for consumers.”
Dish said in a filing to the FCC in May that it will not be able to launch its proposed LTE-Advanced network until 2016 or later, about a year after the regulator’s proposed build-out schedule, which requires Dish to launch its network in three years covering 30% of the population. Dish has said that it will take at least 48 months from the time the 3GPP finalizes the S-band specifications for LTE-Advanced to launch its network ‘ those are likely to be ratified in December. However, when it does go ahead, Dish says it will quickly cover 60% of the US population.