US regulators clear Verizon’s $3.6B purchase of 122 wireless licenses

The US Federal Communications Commission (FCC) and Department of Justice (DoJ) have today cleared Verizon’s $3.6 billion purchase of 122 advanced wireless services licenses from cable giant Comcast, Time Warner Cable and Bright House Networks.

In a statement, the FCC’s Chairman Julius Genachowski explains that because Verizon had divested is spectrum to one of its competitors — rival operator T-Mobile — and had begun to build out its new spectrum to enhance roaming from other networks, Verizon’s venture was deemed “pro-consumer and that its products cannot be used in anti-competitive ways.”

Genachowski added: “Approval of the substantially modified transaction will promote the public interest and benefit consumers in several ways. By advancing U.S. leadership in 4G LTE deployment, the transaction marks another step in our effort to promote the U.S. innovation economy and make state-of-the-art broadband available to more people in more places.”

As part of the deal, Comcast will receive $2.3 billion from the sale, with Time Warner Cable receiving $1.1 billion – both of which own around 95% of the company SpectrumCo. Bright House Networks, which owns 5.3% of the company, will receive $189 million.

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At the time, each of the companies agreed to enter several agreements to sell each other’s products and services:

Through these agreements, the cable companies, on the one hand, and Verizon Wireless, on the other, will become agents to sell one another’s products and, over time, the cable companies will have the option of selling Verizon Wireless’ service on a wholesale basis. Additionally, the cable companies and Verizon Wireless have formed an innovation technology joint venture for the development of technology to better integrate wireline and wireless products and services.

And both Verizon and Comcast defended themselves in front of Congress.

With Verizon beginning to offer such agreements and work with its rivals, the FCC approved the deal. However, there are restrictions,

Verizon, Comcast, Time Warner Cable, Bright House Networks, and Cox Communications Inc will have to restrict cross-marketing agreements until December 2016, giving them a reason to continue competing against each other.

Comcast’s Executive Vice President  David L. Cohen believes the regulators have preserves the most important goals of the agreements.

He notes:

“Comcast’s ability to market Verizon Wireless services throughout our footprint in order to offer our customers a wireless option, Verizon Wireless’ ability to market our products in virtually all of our footprint, our ability to opt into an MVNO relationship with Verizon Wireless, and the essential structure of the innovation R&D technology joint venture.

The FCC will publish the approval order shortly, explaining in more detail how it arrived at its decision and what the interested parties will have to agree to.

[Image Credit: Pop Culture Geek]