Verizon Wireless Makes $3.6 Billion Deal With U.S. Cable Giants

Verizon Wireless, the largest U.S. mobile-phone carrier, is spending $3.6 billion to buy wireless spectrum from SpectrumCo, a cable joint venture that includes Comcast, Time Warner Cable and Bright House Networks, with each receiving $2.3 billion, $1.1 billion, and $189 million, respectively, to sell their share in the JV to Verizon.

As a result of the deal, the cable operators will resell Verizon Wireless service instead of operating their own wireless brand in SpectrumCo. Or as the New York Times puts it, "Instead of creating its own wireless services, Comcast, Time Warner Cable and Bright House will market Verizon’s service, and in turn Verizon will market the cable companies in their respective local markets."

Verizon is hungry for more airwaves to accommodate increasing consumer demand from mobile devices to watch video and browse the Internet, and the deal will yield 122 Advanced Wireless Services (AWS) licenses, improving 4G services to its customers. "Spectrum is the raw material on which wireless networks are built, and buying the AWS spectrum now solidifies our network leadership into the future," stated Dan Mead, president and CEO of Verizon Wireless.

Comcast, Time Warner Cable and Bright House will be able to provide wireless service to customers via Verizon’s network and Verizon Wireless is free to sell their products, including pay-TV, in its stores.

It’s also the end of a dream for the three U.S. cable operators to create and manage their own wireless network. "It's really hard for a cable company to expect to compete in a highly competitive wireless market," commented Time Warner Cable spokesman Alex Dudley to the Wall Street Journal. "We got a good price for the spectrum. An arrangement like this makes a lot of sense."Continue reading...