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US restricts Verizon s  wireless footprint
US restricts Verizon's wireless footprint

The US Justice Department has unveiled limits on Verizon's effort to expand its wireless entertainment footprint, amid worries the firm was building a monopoly with other cable operators.

After a seven-month review, the agency approved the mobile phone and cable giant's $US3.6 billion ($A3.44 billion) deal to buy wireless spectrum from major cable television rivals Comcast, Time Warner Cable and Bright House Networks.

But regulators placed limits on the four companies' plans to co-operate in their respective markets as part of the deal by bundling their products together.

It also said Verizon, the country's largest wireless phone carrier, would divest some of the spectrum to smaller competitor T-Mobile.

T-Mobile was left in a weak position spectrum-wise after regulators squashed its takeover by Verizon rival AT&T in December.

The deal announced by the four companies last year - one of the largest spectrum sales ever - sparked antitrust lawsuits over fears that Verizon would sell its expanded wireless services with the cable services of the others, binding the firms' businesses closely together.

The result, regulators feared, would be that the four would stop competing between themselves in cable, wireless, DSL and other services.

In addition to its wireless business, Verizon competes in the DSL and cable TV sector with its FiOS bundled wire service.

Regulators also feared that the joint marketing would give Verizon an unassailable position in the rapidly growing 4G LTE-standard wireless broadband and video market.

The sector has been booming as online streaming has improved in quality and as more consumers opt to stream multimedia like films via wireless phones and tablets rather than wire-based televisions and computers.

Verizon has said that the spectrum deal would give it access to 259 million more potential customers for its newest generation wireless service.

"By limiting the scope and duration of the commercial agreements among Verizon and the cable companies while at the same time allowing Verizon and T-Mobile to proceed with their spectrum acquisitions, the department has provided the right remedy for competition and consumers," said Joseph Wayland, who heads the Antitrust Division of the Justice Department.

In approving the deal, the agency did not forbid the joint marketing or bundling of products. But it blocked early agreements between the four that would have restricted or discouraged Verizon from marketing FiOS services against the other three.

And it put a time limit on joint bundling exclusivity deals between Verizon and the cable firms, as well as a time limit on a new technology research joint venture between the four.

The agency said that under the original deal terms, the open-ended collaboration could have threatened long-term competition and hindered the companies from pursuing innovations outside the joint venture.

A Verizon spokesman said the company looks forward to the Federal Communications Commission's widely expected approval of the deal "so that we can move forward with meeting the unprecedented consumer demand for innovative 4G LTE mobile and data driven products and services."

But critics of the deal said the Justice Department's requirements will do little to protect consumers.

The deal "is a recipe for wireless duopoly" between Verizon and AT&T and would also make it nearly impossible for new entrants into the broadband Internet market, according to the Computer & Communications Industry Association.

The federal requirements "are no match for the powerful business incentives of these dominant network operators/internet access providers to carve up wireless and geographic landline markets for their mutual benefit," the CCIA said.