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Putting Unused Spectrum to Work A Benefit in Verizon Deal

Putting Unused Spectrum to Work A Benefit in Verizon Deal

Wallsten also Proposes Joint Venture Analysis Framework in FCC Comments

Contact: Amy Smorodin
(202) 828-4405

February 21, 2012 – The purchase of spectrum proposed in the Verizon Wireless-SpectrumCo deal should benefit consumers and does not in itself raise antitrust concerns because the spectrum is currently not being used, explains Scott Wallsten in comments filed today with the Federal Communication Commission. In addition, the proposed joint commercial agreements, which are common across industries, should be analyzed according to the Antitrust Guidelines for Collaborations Among Competitors defined by the Federal Trade Commission and U.S. Department of Justice.

In his comments, Wallsten, Vice President for Research at the Technology Policy Institute, identifies the importance of secondary spectrum transactions, such as the transaction proposed in the Verizon Wireless deal, for ensuring that spectrum moves to its highest-value use as market conditions change. “The proposed transaction would accomplish precisely what the FCC envisioned when it began promoting secondary markets: quickly moving spectrum to more productive uses without the need for a long, complicated process of reclaiming and re-auctioning the spectrum,” he explains. The proposed deal is positive for consumers because it transfers spectrum that was not being deployed by its original purchasers to an entity actively building a 4G/LTE wireless network.

Wallsten also addresses market concentration concerns, noting that although the deal involves moving large amounts of spectrum from one firm to another, it does not immediately affect consumers or other firms in the market. In addition, Wallsten explains that if spectrum concentration is of particular concern, the FCC could best address it by making more spectrum available, as opposed to restricting secondary transactions between firms.

While specific analysis of the proposed joint business agreements is not possible without more information specific to the deal, Wallsten suggests that an appropriate approach for antitrust authorities is the guidelines set by the FTC and DOJ concerning collaborations among competitors. These guidelines acknowledge that such agreements can result in pro-competitive effects by reducing the costs of bringing products to the market or allowing the introduction of new products that the firms could not have marketed on their own. However, such agreements can also facilitate collusion on pricing and output decisions and reduce incentives to compete independently.

Wallsten’s comments are available on the TPI website.

The Technology Policy Institute

The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at https://techpolicyinstitute.org/.

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