Verizon Wireless, a joint undertaking between Verizon Communications, Inc. and Vodafone Group Plc of UK, scored a huge victory when it received news that the US Justice Department had approved its bid to purchase advanced wireless spectrum from cable operators including Time Warner Cable, Bright House Networks, Cox and Comcast. The DoJ has also approved Verizon’s deal to sell a large portion of the wireless spectrum to T-Mobile USA. 

The approval does come with several stipulations, however, which will be put into place to safeguard consumers from excessive pricing. The US Justice Department has asked cable operators to make necessary changes in the agreements so that healthy competition between the cable companies and Verizon Wireless is maintained. According to sources within DOJ, without such amendments, competition could stall, resulting in high prices and low service quality.

The agreement prevents Verizon from selling cable services in geographic areas where FIOS is already available and limits this restriction to a term of only five years. In addition, both Verizon and the cable companies must file regular reports to the Department of Justice to ensure the alliance does not impair competition.

Last December, Verizon Wireless and SpectrumCo., a conglomerate of cable operators, agreed to a $3.9 billion deal by which Verizon would gain an extra 20 megahertz of wireless spectrum in the Advanced Wireless Services (AWS). Verizon had intended to utilize this extra capacity for its 4G LTE network. As part of the agreement, Verizon also accented to a number of commercial agreements and a joint undertaking in technology research.

In addition, Verizon Wireless had consented to the transfer of a large amount of the wireless spectrum to T-Mobile USA and declared a process to publicly sell additional unused wireless spectrum. Immediately after the announcement, the Antitrust Division filed a suit to restrict cable operators from implementing the commercial deals.

The announcement was made after a lengthy inquiry by the Federal Communications Commission (FCC), which examined whether the sale and purchase of wireless spectrum would violate antitrust laws. While the deal is still awaiting final approval from the FCC, it’s likely to be granted soon.