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Verizon Nabs Large Chunk of Cable Industry Spectrum
$3.6 Billion Deal Involves Future Potential Partnerships
by Karl Bode 10:39AM Friday Dec 02 2011
Under the name SpectrumCo, a coalition of the nation's largest cable companies managed to snag a large swath of spectrum during the FCC AWS auction a few years back -- technically enough to make them the nation's fifth largest wireless provider. Speculation raged for several years about what the companies planned to do with the spectrum, and while there was talk about them building their own wireless network, the majority (with the exception of Cox, who tried and failed to build a network) of them just sat on it. A few years later and Comcast, Time Warner Cable, and Bright House are selling a major chunk to Verizon:
quote:
SpectrumCo, LLC, a joint venture between Comcast Corporation, Time Warner Cable, and Bright House Networks, today announced it has entered into an agreement pursuant to which Verizon Wireless will acquire its 122 Advanced Wireless Services spectrum licenses covering 259 million POPs for $3.6 billion. Comcast owns 63.6% of SpectrumCo and will receive approximately $2.3 billion from the sale. Time Warner Cable owns 31.2% of SpectrumCo and will receive approximately $1.1 billion. Bright House Networks owns 5.3% of SpectrumCo and will receive approximately $189 million.
There had been some rumblings that one option for T-Mobile should the AT&T deal fall through was a partnership with the cable industry to access their spectrum, and that's obviously not happening now. Part of the deal involves Verizon being the go-to partner for Comcast, Bright House and Time Warner Cable should they want to develop future wireless offerings:
quote:
The companies also announced that they have entered into several agreements, providing for the sale of various products and services. Through these agreements, the cable companies, on the one hand, and Verizon Wireless, on the other, will become agents to sell one another's products and, over time, the cable companies will have the option of selling Verizon Wireless' service on a wholesale basis. Additionally, the cable companies and Verizon Wireless have formed an innovation technology joint venture for the development of technology to better integrate wireline and wireless products and services.
The deal may also have an interesting impact on Clearwire, who had previously been the cable industry's go-to partner on "4G" wireless service bundles. Verizon, who now becomes the nation's largest spectrum holder (depending on AT&T Qualcomm and T-Mobile deals), is also cooking up a quiet residential fixed LTE service with DirecTV. Verizon's making it fairly clear to AT&T -- and everyone else -- who is going to be the United States wireless broadband king.

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FFH5
Premium
join:2002-03-03
Tavistock NJ
kudos:5

Quadruple for Comcast & TWC - Verizon supplies cell service

So, now Comcast & TWC can sell a quadruple play service under 1 bill. TV, Internet, Local landline, & cell service under 1 bill. With Verizon managing a very strong cell service for them.

But will it actually be better than dealing with Verizon directly for cell service?
Crookshanks

join:2008-02-04
Binghamton, NY

Re: Quadruple for Comcast & TWC - Verizon supplies cell service

said by FFH5:

But will it actually be better than dealing with Verizon directly for cell service?

I combined my Verizon DSL bill with my Verizon Wireless bill and now I talk to the "Verizon Wireless One Bill Department" whenever I call them. They actually seem to be a bit easier to deal with and better trained than the regular VZW reps, though we'll see how long that lasts.

ITALIAN926

join:2003-08-16
kudos:2
Reviews:
·Verizon FiOS
I think we're a little closer to seeing pigs fly.

Instead of better integrating their wireless with their wireline services like FiOS, they are looking to make deals with the cable companies. If this isnt conflict of interest, I dont know what is.
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:2
said by FFH5:

But will it actually be better than dealing with Verizon directly for cell service?

I can tell you that for POTS it usually wasn't. I have seen more than one customer become irate when Verizon didn't fix their phone. Typical scenario:

AT&T customer calls in a trouble to AT&T.

Verizon truck shows up to greet customer. 'What are you guys doing here? I don't have Verizon anymore... I have AT&T.'

'Sorry, you may not know it but you still have a Verizon line. AT&T just sends you the bill.'

Proceed to demarc on side of customer's house and find POTS working just fine. ANI the number so customer can hear their line working.

'Yeah, but the phone in the house doesn't work!'

'Sorry, we are only responsible for the dialtone up to this point. We will turn the trouble back to AT&T and they will have to send someone to fix the problem in the house.'

'Well when will that be?!'

'I have no idea.'

'Wait! You can't leave! I need my phone!! VERIZON SUCKS!!!'

'Bye, have a nice day.'
Ostracus

join:2011-09-05
Henderson, KY

Re: Quadruple for Comcast & TWC - Verizon supplies cell service

That's what those "no fault" inside line plans are for.
grays

join:2006-02-14
Rochelle Park, NJ
Let me see what are you saying?who do you blame for this scenaro?
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:2

Re: Quadruple for Comcast & TWC - Verizon supplies cell service

Blame? I don't know that I was trying to blame anyone really... only to point out the inefficiency of a middle-man reselling another provider's service and how it's the customer that gets caught in the middle. And, I can assure you, this is not a made up scenario (well except for the Verizon Sucks comment) it has happened to me more than once.

If I were to point fingers, I would say there is enough blame to go around:

1 - The regulators who came up with the silly idea that forcing wholesale would be good for competition.

2 - AT&T for automatically requesting Verizon dispatches on all of their 'no dialtone' troubles. And for not explaining to customers that they still have lines from Verizon.

3 - Verizon for having such crappy service that a customer would even think of going to AT&T.

4- Customer.... hmmm, sorry, I can't think of anything to blame on them.
25139889

join:2011-10-25
Toledo, OH
they already did this with Sprint and it was canned shortly after words.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

only wireless cable..

The only wireless cable will be Satellite Tv.. since the cable industry is too conservative on their investments. Verizon on the other hand has historically made prudent investment and financial moves to solidify and grow it's market share. AT&T just likes making controversy and foolish greedy moves that increase distrust of the company and rebuild the atomosphere hated when Ma-Bell was as arrogant as Standard Oil or Railroad monopolies of the past.

Still, the focus should be on getting minority carriers to acquire and build upon new spectrum licenses. This is the main path to getting competition to flourish. The deal does nothing really to help that cause.. but doesn't necessarily hurt it either. There are still questions about what Sprint hopes to accomplish with their phone book long list of partner companies.. some of which are cable companies. If anything, their non-transparency provides ample cover for what Verizon's buying now.. so if nothing else, it's a savvy move by Verizon.
itguy05

join:2005-06-17
Carlisle, PA

Re: only wireless cable..

said by tmc8080:

Still, the focus should be on getting minority carriers to acquire and build upon new spectrum licenses. This is the main path to getting competition to flourish.

And how does that benefit customers? Company XYZ will have to spend Millions to create that network. They will want to make that $$ back and when they see that you will pay $X for service they will initially price their service at a little less than $X. But over time it will go up to near the same as the big boys. Why? Investors -at some point they will need to make a profit or increase their profit level.

Competition does nothing but make you feel good. It almost never results in truly lower prices or better service. Look at gas stations or grocery stores as an example. All are roughly the same prices across the board....
axus

join:2001-06-18
Washington, DC
Reviews:
·Comcast

I wonder why AT&T didn't buy it instead

The stated reason for buying T-mobile was because of problems with limited spectrum. I doubt they needed any of T-mobiles other assets, and as T-mobile is losing customers they would probably get those anyways.

Good buy for Verizon. It won't decrease competition, because "SpectrumCo" didn't have customers or affect the price of cell phone service.

How much profit did SpectrumCo make?

lynkx

@comcast.net

Re: I wonder why AT&T didn't buy it instead

Little over a billion profit. Not too shabby. Paid 2.37 B and sold for 3.6 B. There was a buyout of Cox Communications along the way.

JLNHS

@rr.com

It won't decrease competition

The acquisition of this spectrum by Verizon decreases the available supply of spectrum for new entrants and competitors. In effect, it protects Verizon from having to compete with other companies and decreases potential competition because there is a finite supply of spectrum.

Based on this FCC document (unless I've missed something), SpectrumCo paid approx. 1.298 Billion in Sept. 2006:

»wireless.fcc.gov/auctions/defaul···2006&m=9 (PDF - Quick View)

lynkx

@comcast.net

Re: I wonder why AT&T didn't buy it instead

per Multichannel they paid 2.37 B.

»www.multichannel.com/article/477···lion.php
mogamer

join:2011-04-20
Royal Oak, MI
said by axus:

The stated reason for buying T-mobile was because of problems with limited spectrum. I doubt they needed any of T-mobiles other assets, and as T-mobile is losing customers they would probably get those anyways.

ATT didn't want this because it doesn't reduce competition by eliminating a competitor.
rradina

join:2000-08-08
Chesterfield, MO

Long live video protection...

So Verizon will wholesale service to big cable since they (cable) also have video skin in the game. In other words, it's safe for Verizon to assume that cable will never offer a reasonably priced, fixed-LTE package without caps because they too need to protect video. Perfect alignment for the opolists.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK

Re: Long live video protection...

Also keeps any competitor like Sprint, US Cellular, etc etc from doing it.

Win for Verizon. Win for consumers? Not so much, however it will make possible cable Co. MVNOs possible.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

lakerfan82

join:2009-01-30
Corona, CA

It all sounds very incestuous...

I thought Verizon was going to use fixed LTE to reach the customers they sold off to other DSL providers and compete with cable companies. Now they are going to allow the same cable companies they are competing with access to this network? Very odd, but whatever it takes to make a deal I guess.
rradina

join:2000-08-08
Chesterfield, MO

1 recommendation

Re: It all sounds very incestuous...

Those are my exact thoughts. Consumers should be rooting for competition, not collaboration. Frankly, I'd rather see the spectrum go to a third party that competes with both of them.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS
said by lakerfan82:

I thought Verizon was going to use fixed LTE to reach the customers they sold off to other DSL providers and compete with cable companies. Now they are going to allow the same cable companies they are competing with access to this network? Very odd, but whatever it takes to make a deal I guess.

I could be mistaken, but I think the expectation is that fairpoint and frontier will fail (not too big to...) and some of the geography will be cherry picked by AT&T for mere pennies.. and not do much with it.. just U-Verse (ugh). Why would these events unfold this way.. because Verizon doesn't really like AT&T.. there's been a huge rivalry since the breakup of MaBell.

IPPlanMan
Holy Cable Modem Batman

join:2000-09-20
Washington, DC
kudos:1

1 recommendation

Meanwhile at AT&T....


Your Cupcake Tricks Will Not Work On Me...
I bet some corporate drone is saying:
"If only we'd have gotten them more cupcakes"...

»www.weeklystandard.com/blogs/bus···064.html

Hopeless....

88615298
Premium
join:2004-07-28
West Tenness

Now they can leave OTA alone

No more whining to the FCC they need more spectrum.
Sammer

join:2005-12-22
Canonsburg, PA

2 recommendations

Re: Now they can leave OTA alone

The reality is that OTA is currently some of the most utilized and beneficial to the public spectrum there is. What isn't being used for OTA would be more valuable to the public with unlicensed white band device use than being auctioned to corporations that have already shown an unwillingness to invest what's necessary for a real broadband (fiber to the home) future. Unfortunately the other reality is there will be whining, lies, etc. aimed at taking away UHF OTA spectrum as long as it is practical for anyone to use an antenna to watch TV without paying a monthly bill. Greed, not spectrum, is the real reason behind the unfair attacks on OTA.
sparc

join:2006-05-06

govt should deny this sale

if we're against the AT&T T-mobile merger, i think we should be against this too.

Giving the smaller competitors more access to these chunks of spectrum would help level the playing field far more.

If all the spectrum just gets gobbled up by Verizon and AT&T, we're going to make the consolidation with the industry inevitable. The smaller players wouldn't be able to compete.

It's funny how Karl and co are so anti AT&T T-mobile merger and they are pretty much silent when this Verizon deal has plenty of problems undermining smaller competitors.
25139889

join:2011-10-25
Toledo, OH

Re: govt should deny this sale

we can't do that because we get pay checks from CellCo's majority stock holder due to we advertise FiOS so much as the world's best thing since slice bread.
chances14

join:2010-03-03
Michigan

i don't like this

just the thought of one company owning all this spectrum makes me uneasy
25139889

join:2011-10-25
Toledo, OH

Re: i don't like this

lol. and why???? This is crazy to be worked up over using the air waves there is still plenty more that can be opened up.
WiWavelength

join:2011-11-16
Lawrence, KS

Re: i don't like this

said by 25139889:

lol. and why???? This is crazy to be worked up over using the air waves there is still plenty more that can be opened up.

One problem with the idea that "plenty more [spectrum] can be opened up" is that wireless spectrum is already becoming ever more fragmented.

A few years ago, wireless carriers operated in essentially three different bands: Cellular 850 MHz, PCS 1900 MHz, and SMR 800/900 MHz. Today, those operating bands have expanded to include, as well, AWS 2100+1700 MHz, BRS/EBS 2500-2600 MHz, Lower 700 MHz (with multiple band classes), and Upper 700 MHz (with multiple band classes). Not to mention, LightSquared and EchoStar (Dish Network) both want to bring Ancillary Terrestrial Component satellite spectrum to the mix, potentially adding ATC 1500 MHz and ATC 2000 MHz, respectively.

All of this increasing fragmentation of wireless spectrum concomitantly leads to increasing fragmentation among device compatibility. Since wireless devices cannot readily support all of the emerging operating bands, device manufacturers frequently focus on largely/exclusively carrier specific capabilities (e.g. VZW and Upper 700 MHz band class 13, T-Mobile and AWS 2100+1700 MHz band class IV). And this becomes just another tie that binds in the dysfunctional contract subsidy system -- an impediment to true competition and consumer choice.

AJ
25139889

join:2011-10-25
Toledo, OH

Re: i don't like this

Still don't see the problem.

And DishNetwork is a separate company from EchoStar. Has been for some time.
WiWavelength

join:2011-11-16
Lawrence, KS

Re: i don't like this

said by 25139889:

Still don't see the problem.

And DishNetwork is a separate company from EchoStar. Has been for some time.

I "don't see" how your response says much.

And both EchoStar and Dish Network hold stakes in Manifest, which is the license holding entity for Lower 700 MHz spectrum.

AJ

aannoonn

@optonline.net

Cable comapnies in Canada provide cell service

Don't know why US cable companies don't.
25139889

join:2011-10-25
Toledo, OH

Re: Cable comapnies in Canada provide cell service

they did. Its called being an MVNO but we've seen that those don't work. You can't piggy back on someone else for ever and the MSO's don't want to build out a new network; especially since in one state you can have 4 or 5 cable providers and they only cover a small area.. Those companies would need to build a network together and share it. And that won't happen. They created this company to make the $$ back that they wanted.

The only real option for the MSO's is to buy someone out and that could be Sprint-Nextel if China Mobile doesn't buy them up.

ggma1126
GGMA1126
Premium
join:2008-08-30
Claymont, DE

Just wondering

now comcast will be selling their services in verizon wireless stores along side fios services - looks like comcast found an easy way to compete with fios in areas that have it should be interesting to watch this play out especially in the areas that have fios available - remember Verizon communications owns 55% of verizon wireless -

nyc26

@spcsdns.net

Re: Just wondering

All this doesn't make since Verizon wants to destroy the cable companies especially time warner and Cablevision in nyc. This only mean a vote of non confident in those clowns at Clearwire.

ggma1126
GGMA1126
Premium
join:2008-08-30
Claymont, DE

Re: Just wondering

in the philly /delaware area they try hard to win over fios customers i come home everyday to mail asking me to come back to ccast so I am assuming Comcast is loving the fact that they will be selling their services in the same retail outlets as fios JMO