Comcast, Time Warner Face Reality, Sell Wireless Spectrum to Verizon

Posted by · December 2, 2011 12:39 pm

It’s not unlike cable companies to venture into other markets in order to offer additional services to customers. In fact, it is difficult to find a cable company that doesn’t offer some sort of a bundling package that includes phone and high-speed Internet service. But today, three cable companies—Comcast, Time Warner Cable, and Bright House Networks—decided to acknowledge the reality that wireless data service is not going to be one of those bundled services.

To be sure, Cox Media attempted a similar venture, acquiring spectrum and ultimately selling it due to the company’s inability to gain a suitable edge in the wireless market.

Working collaboratively with Verizon Wireless, the three cable companies agreed to sell its spectrum to the wireless powerhouse for $3.6 billion. This merger—so long as it gets FCC approval—will give Verizon a well-timed enhancement to its wireless data networks as the company gears up to compete with the ever-growing AT&T network.

As an added sweetener to the deal, Verizon has also agreed to promote these companies’ cable services in exchange for a little pro-Verizon marketing in their respective local markets.

“This is a really big deal,” says cable analyst Craig Moffet. “Maybe the most significant deal the industry has ever seen.”

According to Moffet, the deal is part of a much larger “complete reordering of the competitive universe as we know it today.” In fact, he continues, the extra benefit of exchanging positive marketing is no less than “a partnership between formerly mortal enemies.”

Speaking on behalf of Comcast, President of Cable Neal Smit wrote on the Comcast blog, “Today, we’ve taken a significant step to deliver and develop the best integrated mobile video, data and telecommunications experience by bringing together the nation’s best Internet and wireless networks.”

Meanwhile, Verizon chairman and CEO Daniel Mead called the deal a “critical mechanism” for future wireless service delivery.

Overall, it would seem that Verizon has been dealt a huge victory. And the timing could not have been more perfect.