Verizon on Wednesday defended its $3.6 billion plan to purchase cable-owned spectrum and enter into a business deal with the companies, but opponents painted the agreement as anti-competitive and an ideal way for the firms to dominate their industries.

Randal S. Milch, executive vice president and general counsel with Verizon Communications, told the Senate Judiciary antitrust subcommittee today that the purchase will, in the short-term, allow the company to meet its customers' needs and is a "good reallocation of an important asset."

In January, Verizon announced plans to purchase 122 Advanced Wireless Systems (AWS) spectrum licenses from SpectrumCo, LLC, a joint effort from Comcast, Time Warner Cable, and Bright House Networks. The companies involved also signed agreements to sell each others' products and services.

David L. Cohen, executive vice president with Comcast, said today that the deal is "entirely additive [for the consumer] - more choice, more competition, more investment, and more innovation."

Not everyone was convinced. Steven K. Berry, president and CEO of the Rural Cellular Association - which counts Sprint and T-Mobile as its members - said the arrangement was "contrived [and] difficult to deconstruct."

"This is about control of the market share and the deal is effectively a non-compete agreement," Berry continued. "This is the equivalent of eliminating a national carrier in the market."

"America's competitive telecom policies should not be relegated to the mantra, 'if you can't beat 'em, join 'em,'" Berry insisted.

Sprint and T-Mobile have both asked regulators to stop the deal.

While spectrum might seem like a rather boring topic to the average consumer, its availability could eventually have an impact on how well your mobile devices work. At this point, the wireless carriers have enough spectrum to keep their networks running, but they argue that with more and more people picking up smartphones and other data-hungry devices like tablets, that bandwidth is running low. Milch said today that Verizon could be hit by the spectrum crunch as early as 2013 without the spectrum provided by the cable deal.

Not All Spectrum Created Equal
If this deal goes through, Verizon and AT&T will control 60 percent of the nation's spectrum, Free Press policy advisor Joel Kelsey argued today. "Not all spectrum is created equal and the more high-quality spectrum [a company owns], the more control they have."

The business arrangement between the two companies is simply an agreement to stay out of each others' way in perpetuity, Kelsey continued. The Justice Department and Federal Communications Commission "showed immense analytical skill and political courage" in rejecting the merger of AT&T and T-Mobile and "preventing this [deal] should be the next installment" of that courage, he said.

Verizon and Comcast, not surprisingly, disagreed. They entered into the business agreement simply so customers would have the option to sign up for this "quad play" of services if they wanted it, Cohen and Milch said.

"We believe we'll offer customers more choices," Milch said. "Right now, if they don't have an option for Comcast with Verizon and they want it, they can get it. Second, no one is constrained to buy in to these bundles. Verizon will continue to sell through all its channels, FiOS too. There's nothing to get from this bundle other than convenience or a discount of some sort that the consumer can choose or not choose."

"That's one of the reasons why this transaction increases customer choice," Cohen chimed in. "It does not take away optionality and improves the consumer welfare and benefit."

When asked if the deal might prompt Verizon to scrap its FiOS buildout and just rely on its cable partners, Milch said Verizon always intended for FiOS to target a limited number of customers, or about 18 million homes in the U.S.

Since 2005, "we had a target in mind and we were clear with how much money we were going to commit," Milch said. "We owe shareholders some return and we owe it to our customers to provide a service."

The FCC is currently examining the issue. In a January statement, a commission spokesman said, "When the applications come before us, the FCC will undertake a thorough, fair and fact-based review of the proposed transaction."