Verizon-Big Cable looking to avoid cross-marketing rules

The ink is hardly dry on the deal, and Verizon Wireless and the cable companies are already looking for ways around the federally set limits on their cross-marketing plans. Both the FCC and the Justice Department signed off on the deal that permitted Verizon and three major cable providers to sell each others' products and services - within limits.

Justice Department regulators were indeed wary about the arrangement. They said it might "unreasonably diminish competition between Verizon and the cable defendants -- competition that is critical to maintaining low prices, high quality and continued innovation." That's why the Justice Department ruled that Verizon Wireless cannot sell cable in areas where Verizon has a franchise to sell its competing FiOS Internet and video service.

But a report in The New York Times said that this restriction "appears to be malleable." The Times wrote that "Time Warner Cable says it plans to have a presence in select Verizon stores in New York City, although FiOS is available in much of the area. Comcast says it plans to enter the Northeast market, too, possibly via the Verizon Web site if it is not permitted to enter stores in FiOS areas." The article quotes a Comcast executive who says the company will figure out a way to "work around" the cross-marketing restriction. Comcast has trained Verizon salesclerks at its "Comcast University" center in Philadelphia. While a Verizon Wireless executive told the Times that his company does not plan to have cable companies' salesclerks in its stores, Verizon Wireless expects 75 percent of its 2,000 retail outlets will offer cable bundles.

CWA and Speed Matters warned that the companies would find ways around the Department of Justice consent decree, but even we had no idea that they would plan to flout the rules so rapidly and openly. This calls for a prompt response by the FCC and Justice Department.

Mobile Services and Cable TV Are Unexpected Allies (New York Times, Sep. 23, 2012)