Justice Department moves on from AT&T to Verizon

The Department of Justice now probing Verizon Wireless over several purchases of spectrum from cable companies.
Written by Rachel King, Contributor

Now that AT&T has given up the fight to defend its $39 proposed bid for T-Mobile USA, there is another telecommunications company in the cross hairs: Verizon.

Verizon Wireless has come under fire with an attack from the U.S. Department of Justice, which also boosted momentum for the anti-AT&T/T-Mobile merger when it filed an anti-trust lawsuit in August.

Bloomberg reports that the DOJ is probing Verizon’s sizable purchases of wireless spectrum from cable companies as potential hindrances to competition in the wireless and cable industries.

Those purchases include over 122 Advanced Wireless Services spectrum licenses, which covers 259 million POPs, for a total of $3.6 billion, paid to a trio of cable companies (Comcast, Time Warner, and Bright House Networks), and a deal with Leap Wireless to take over excess spectrum in various markets around the U.S. for $188 million.

Most recently, Verizon picked up 20 MHz Advanced Wireless Services spectrum licenses, covering 28 million POPs, for $315 million from Cox Communications.

Rumors have swirled as to why Verizon has purchased all of this spectrum, including a rampant belief that the mobile company is launching its own video on-demand service.

However, Verizon has repeatedly stated that it is buying spectrum to handle more data usage on its 4G network -- which is precisely the reason as to why AT&T said it wanted (or needed, according to the company itself) to buy T-Mobile.

Thus, we could be seeing a parallel case of AT&T's 2011 as we enter 2012. But it remains to be seen if Verizon can better defend this argument to the DOJ and other potential opponents than AT&T did.

Another wing of Verizon is also in the midst of a legal battle with a cable company over a different issue. Cablevision recently sued Verizon Communications, claiming that the defendant has been running an advertising campaign that misrepresents Cablevision’s Internet speeds.


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