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Verizon & Antitrust

June 6, 2009

Verizon has recently been on both ends of the contemptible U.S. antitrust law. The company has been the victim of antitrust laws and is now attempting to use them against competitors.

Despite the fierce competition between the four dominate wireless providers (Verizon, AT&T, Sprint Nextel & T-mobile) as well as numerous smaller firms, the government has seen it necessary to involve itself. Verizon recently completed a merger with Alltel. One of the conditions of this merger was that Verizon divest itself of many of Alltel’s assets and customers.

According to a Wall Street Journal report, Verizon was forced to sell off 2.1 million wireless subscribers in 22 states, as well as radio spectrum and other assets necessary to run the businesses in those markets.[1]

In essence, the government mad it impossible for some consumers to choose to purchase Verizon Wireless’s service even if they feel it is in their best interest. So it seems that the government is restricting consumers’ choice under the pretense of increasing competition and protecting consumers. Anyone even casually familiar with Austrian theory already understands the absurdity of antitrust laws. The outlandishness of this particular case should be apparent even to non-Austrians.

One hopes that companies that are the victims of antitrust laws will be more likely to lobby against them in the future. Apparently Verizon didn’t learn a lesson from its Alltel deal. Rather than opposing antitrust laws, Verizon is now trying to use these laws for its own gain.

Verizon has entered the cable television market and is now attempting to use the government to advance its interests. Cablevision is the owner of a channel known as MSG which has the rights to broadcast Knicks and Rangers games. Verizon filed a complaint with the FCC because Cablevision wouldn’t allow Verizon to carry its MSG channel. Cablevision tried to appease Verizon by granting access to MSG and MSG Plus. Verizon is now complaining to the FCC because Cablevision will not grant access to MSG in high definition.[2]

Verizon is trying to use the government to violate Cablevision’s property rights. MSG is the property of Cablevision and provides the company with a competitive advantage just as Craftsman is the property of Sears and provides it with a competitive advantage. Is Sears’ refusal to sell Craftsman products in Walmart anti-competitive and harmful to the consumer? Certainly not.

As has always been the case with antitrust laws, companies are all too willing to support and use them when it is to their advantage and to the disadvantage of their competitors. Unfortunately, it is the consumer who generally looses.

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