Warning that Verizon's (NYSE: VZ) marketing deals with Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC) and other cable MSOs will hurt consumers, Sen. Herb Kohl (D-Wis.) urged the Department of Justice and the FCC to "seriously consider taking action" to block the companies from marketing quadruple plays of cable and wireless products to consumers.
Kohl, the chairman of the Senate Judiciary subcommittee on Antitrust, Competition and Consumer Rights, also warned that spectrum deals Verizon struck with Comcast, Time Warner, Bright House Networks and Cox Communications could give Verizon too much market power, and that it should be forced to divest some spectrum if the deals are approved. In March, Kohl and other committee members scrutinized the Verizon-cable deals at hearing. While Kohl's committee doesn't have the power to block the deals, he appears to be urging Attorney General Eric Holder to file an antitrust suit that would threaten the scuttle the alliances between Verizon and the cable MSOs.
"There is considerable precedent for the Justice Department to take action under antitrust law to prevent a dominant firm from gaining access to essential inputs needed by a rival to compete," Kohl wrote in a blistering letter to Holder and FCC chairman Julius Genachowski.
Comcast, Time Warner Cable and Cox have already begun to team up with Verizon Wireless to market prepaid debit cards to consumers that order new products from Verizon and the cable MSOs. The joint promotions could see sales reps from the cable MSOs and Verizon Wireless work together to hook consumers, which Kohl said could be dangerous. "We must be cognizant of the potential for information sharing and even the possibility of collusion by representatives of competing firms being present in one store and selling competing products, and jointly selling one quad play," Kohl wrote.
Verizon downplayed the impact that Kohl's letter could have on the spectrum and marketing pacts with the major cable MSOs, and suggested that it is a sign that the spectrum deals may be approved soon. "While Senator Kohl's letter recounts the arguments reviewed at the Senate hearing, it is another indication that this transaction is on the road toward approval this summer," Verizon EVP of public affairs, policy and communications Thomas Tauke said in a statement.
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