The Justice Department is holding up approving Verizon Wireless's $3.9 billion bid for spectrum from cable firms because of concerns that a marketing deal between the companies that could thwart cable and Internet service competition.
Last year, Verizon agreed to bundle its wireless service with cable, Internet and traditional phone subscriptions offered by Comcast, Time Warner, Bright House Networks and Cox Communications in what would replace "triple play" packages popular among consumers.
The concern is that Verizon, eager to boost cellular customers, would play down its FiOS service, which provides high-speed Internet, cable and land-line service and directly competes with traditional cable.
FiOS is available to 14 million U.S. homes, and regulators see it as an important alternative for consumers. If that business declines, many families may be left with just one or two options in many markets, analysts say.
The Justice Department may force Verizon and the cable firms to make concessions on the marketing portion of their agreement, analysts say.
That raised some concern by officials who fear the increased coziness of Verizon, the nation's biggest wireless firm, with its former rivals in traditional cable. Some observers wonder if the alliance could edge out firms who provide cellular service or who are trying to make forays into providing Web-based television such as Apple, Google and Netflix.
Verizon Wireless and cable firms won favor from the Federal Communications Commission after agreeing to sell airwaves to T-Mobile USA, the nation's fourth largest wireless carrier, the Washington Post said it was told by people familiar with the review.