Harold Feld’s Insanely Long Field Guide To The Verizon/SpectrumCo/Cox Deal

Do you want to think of yourself as a well-informed citizen when it comes to technology issues? If so, you probably need to read Harold Feld’s explanation of the Verizon/SpectrumCo/Cox Deal.

In reading this, please keep in mind that in the many years I have been acquainted with Harold Feld, I have never seen anything that would tend to brand him as an alarmist.

A choice bit:

And before you could say “dangerous levels of spectrum concentration,” the former mortal enemies had become total BFFs — just like Stephen Colbert and Jimmy Fallon, but in reverse. In fact, Verizon Wireless and cable multisystem operators (“MSOs” as we say in telecom) are so into each other now that they simultaneously entered into agreements to become exclusive resellers of each other’s products and to jointly develop a whole bunch of new technologies together. The companies insist these three side agreements are totally, completely and utterly unrelated to the spectrum sale and that unrelated side agreements are just the natural love child of freaky four-way spectrum hook ups.

A few weeks later, Verizon graciously offered to buy out Cox’s AWS spectrum so that Cox could get out of the wireless business. And, in what can only be an amazing coincidence for utterly independent agreements that should in no way make anyone think that the major cable players are colluding with their Telco/Wireless chief rival, Verizon and Spectrumco offered to let Cox in on the same three agreements to become exclusive resllers and become a member of the “Joint Operating Entity” (JOE) to develop all these cool new technologies.

So you see, it’s all totally innocent, and does not in the least look like a cartel agreeing not to compete, dividing up markets, and setting up a Joint Operating Entity so they can continue to meet and discuss their business plans on an ongoing basis while developing a patent portfolio to use against competitors like DISH and T-Mobile. In fact, these three side agreements are so harmless and so completely independent of the spectrum sale that Verizon and the MSOs initially refused to give them to the FCC. When they finally did agree to put them in the record under protest, they cut a whole bunch of stuff out. Because really, as Verizon and the cable MSOs said in their response, what one mega-corp says to four of its largest competitors is really no one’s business.

Verizon will actually resell the cable MSO video services they used to (and in theory still do) compete against, while the MSOs will resell Verizon’s mobile wireless service. On top of that, they will get together as part of the “JOE” to discuss each other’s business, facilitating further cooperation. Finally, the technology developed by these one-time-rivals will be used to disadvantage competitors, much the same way Comcast is currently using its TV Everywhere certification to keep HBO On The Go off devices that facilitate ‘cord-cutting’, like Roku.

But there’s so much more…the really wonky stuff starts like this:

We can divide the substantive issues into three main categories: (a) Spectrum concentration issues that come from pumping up one of the top two wireless carriers with even more primo spectrum; (b) whether the side deals represent an illegal division of relevant markets between competing firms or, even worse, the formation of an actual cartel (a term I do not use lightly); and, (c) all kind of angsty, big picture stuff about whether the whole theory of the Telecom Act of 1996 really works and we can have facilities based competition, or whether Susan Crawford is right and we are doomed to a dystopian future where a cable monopoly controls our broadband and thus our digital future — except for the mobile part which will be controlled by an AT&T/Verizon Duopoly. But since they will be part of the new Communication Cartel, that won’t really matter.

And it does go on. Yes, it is insanely long. But he’s got me believing it’s a Big Deal.

For example,

The parties agree to form a “Joint Marketing Entity” (JOE) “for the development of technology to better integrate wireline and wireless products and services” (to quote the official press release). To translate: the largest residential broadband providers, who also happen to be among the largest residential video, and the largest mobile services provider, will sit down to jointly develop technologies on how to better integrate their supposedly competing services. You know how Google, Apple, Microsoft, and RIM are all involved in this “mobile patent war?” Imagine if, instead of each of them trying to develop competing wireless operating systems and technologies, they said: “Hey, we’re the four biggest developers of mobile operating systems. Instead of competing, lets pool all our patents together and not let anyone else license them from us except on terms we all agree to use. We’ll meet in a back room every month, talk about all our future development plans, and make sure that we develop patented technologies and proprietary standards for where we plan to take the industry going forward.” Why would that possibly raise any concerns?

I could go on, but then this would become an insanely long summary.

Read it.

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