“The transaction is an integrated transaction. There was never any discussion about selling the spectrum without having the commercial agreements.”
In an ex parte filing with the FCC today, RTG, Media Access Project, T-Mobile, Free Press, Sprint, Public Knowledge and DIRECTV argued that throughout the proceeding to assign AWS licenses, the applicants have claimed that their commercial agreements are not subject to Commission review because they are “separate from, and not contingent upon” their proposed spectrum assignment. Given the parties involved, the apparent subject matter of the agreements, and the fact that the commercial agreements were negotiated and finalized at the same time as the spectrum assignment agreements, this assertion has always been highly suspect at best.
Yesterday, a senior executive of one of the cable companies involved in these arrangements confirmed the obvious. In an article published this morning, David Cohen, Executive Vice President of Comcast, was asked about the relationship between the commercial agreements and the spectrum assignment. The exchange was reported as follows:
Question: Your company and Verizon Wireless are arguing before the DOJ and the FCC that the joint-marketing agreements do not need to be reviewed by federal regulators, and are separate and apart from the spectrum sale. If Verizon hadn’t agreed to the joint- marketing agreements, would you still have been willing to sell the spectrum?
David Cohen: The transaction is an integrated transaction. There was never any discussion about selling the spectrum without having the commercial agreements.
Eliza Krigman, “Comcast Executive Defends Verizon-SpectrumCo Deal,” POLITICO PRO (Mar. 8, 2012)
In light of this admission, Applicants’ continued claims that the commercial agreements are unrelated to the spectrum transaction and that therefore the Commission “lacks jurisdiction” over these agreements are specious. The Commission has specifically rejected arguments that it has jurisdiction only over the disposition of licenses transferred as part of a larger “integrated transaction.” Contrary to Applicants’ assertions, moreover, the Commission routinely examines “agreements that do not include license transfers” as part of its review of the larger transaction.
There is no basis for it to act any differently here.
Equally disturbing is Applicants’ apparently evolving position with respect to DOJ jurisdiction. In their prior submissions to the FCC, they argued that the FCC need not consider the commercial agreements because “they are already the subject of review by the . . . Antitrust Division.” Now, however, they appear to be saying that even DOJ lacks jurisdiction over those agreements.
If nothing else, such gamesmanship only underscores the importance of transparency in this proceeding. The Commission must ensure that the record includes complete and unredacted versions of the commercial agreements, and that interested parties are given sufficient opportunity to review and comment upon them.