Verizon Wireless' deal with cable providers is facing scrutiny from the Justice Department.
That's according to a report today from Bloomberg, citing an anonymous source. The report said the Justice Department would look at whether Verizon would control too much spectrum, and whether the cross-selling component of the deal would violate antitrust laws.
Verizon earlier this month shored up its spectrum needs by acquiring a swath owned by Comcast, Time Warner Cable, and Bright House Networks for $3.6 billion. As part of the deal, Verizon agreed to resell cable service in its national chain of stores, while the cable companies could resell wireless service. In a later deal, Verizon bought Cox Communications' spectrum for $315 million.
The need for spectrum has driven the recent spate of merger and acquisition deals in the wireless industry. AT&T's primary objective in its bid to acquire T-Mobile was to gain spectrum, but the Justice Department believed the elimination of a national player would hurt the competitive environment too much. AT&T yesterday scrapped the deal.
Of course, it is the Justice Department's job to review all transactions, so a look into the deal between Verizon and the cable companies may not necessarily signal the same level of opposition.
Verizon spokesman Peter Thonis said, "We haven't received any information on which to comment."
Consumer groups, however, have voiced their opposition to the deal, noting that the cross-selling agreement represents the potential loss of a competitor in the pay TV business.