Verizon Buys Spectrum for $3.6B, FCC Yet to Approve Deal
Verizon Wireless said on Friday that it agreed to purchase wireless spectrum from three cable companies for $3.6 billion.
Spectrum Co - a joint venture between Bright House Networks, Comcast, and Time Warner Cable - once owned the block of cable spectrum. According to Forbes, in addition to Verizon’s purchase of the spectrum, all three of the cable companies will have the right to buy wireless service from Verizon at a wholesale price.
Bernstein Research analyst Craig Moffett said the move is a “complete reordering of the competitive universe as we know it today.” Moffett also said the spectrum deal is important, but the crucial part is the marketing deal between Verizon and the cable companies.
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He said the deal is like a “partnership between formerly mortal enemies, not just outside of Verizon’s FiOS territories, but even within them.” The deal is not completed, though. It will need to be approved by the Federal Communications Commission and an antitrust review by the U.S. Justice Department.
According to the New York Times, Verizon expects the deal to be completed towards the middle of 2012. Moffett also highlighted some key points of the monster deal. He said that within a “matter of weeks” Verizon would be a marketing machine for cable broadband, video, and voice services.
He claimed that markets such as Atlanta, Chicago, or Denver would be offered the best wireless deal by Comcast, that would include broadband, video, voice, and Verizon mobile service.
“Upfront handset subsidies, for example, could be significantly increased if a customer also signed up for Comcast’s terrestrial service offerings,” said Moffett.
In about 4 years, cable companies will be able to market their own wireless service under Verizon. The company will also be able to market their own cable service, besides FiOS.
This deal also is significant for the proposed AT&T and T-Mobile merger. As it seems the FCC is not consenting of their merger T-Mobile might be left in the dust with no “4G strategy.”
One interesting significance of the deal is that cable companies desire to go mobile.
“Mobility is an important part of the experience that we deliver to our customers today and will be an increasingly important part of Comcast’s future product road map,” said Neal Smit, the president of Comcast, stated in a blog post.
The New York Times elaborated: “Theoretically, the products could make it possible for home devices like a TV set, and mobile devices like an iPhone, to talk to each other digitally.”
