In a $3.6 billion deal, Verizon Wireless just bought a large chunk of wireless spectrum from Comcast, Time Warner Cable and Bright House Networks. As spectrum sales go, it’s rather large — just a billion less than the record-setting $4.74 billion Verizon paid for part of the former UHF band in 2008.
The 122 licenses that Verizon’s picked up potentially reach about 80% of the U.S. population, or 259 million people. Comcast and the others, under the joint venture SpectrumCo, originally picked up the spectrum in a 2006 government auction for $2.37 billion.
The terms of the sale go beyond just a simple exchange, however. According to the press release, the cable companies and Verizon will effectively become agents for each others services. Comcast et al. will eventually have the option of selling Verizon service on a “wholesale basis.” The companies also are partnering to develop technologies that better integrate wireless and wireline services.
While the agreement has potential to create many new product innovations, the implications may conflict with some fundamentals of Net Neutrality, which generally holds that services should should not be given preferred status over an Internet connection, regardless of who’s providing that connection. In the Federal Communication Commission’s recently published rules on Net Neutrality, however, some exceptions are made for wireless services.
In the release, Neil Smit, president of Comcast, says the agreements will enable the company to focus on providing mobility for the company’s Xfinity services. Verizon Wireless CEO Dan Mead said the new spectrum will enable the company to improve its rapidly growing 4G LTE network.
The spectrum is exclusively in the Advanced Wireless Services (AWS) band, which involves microwave frequencies from 1,710 to 1,755 MHz as well as 2,110 to 2,155 MHz. The band is intended for data use on mobile devices. Back in 2006, the FCC auctioned of big parts of the AWS band to various wireless companies (most notably T-Mobile) as well as SpectrumCo, a joint venture between Comcast, Time Warner Cable, Cox, Sprint, and Bright House.
Cox and Sprint have since exited the partnership. Comcast is the big fish in that pond, owning 63.6% of SpectrumCo, netting it $2.3 billion on today’s sale. Time Warner’s and Bright House’s slices amount to $1.1 billion and $189 million, respectively.
The deal is subject to approval by the FCC and review under the Hart-Scott Rodino Act, which deals with antitrust law.
Verizon Gobbles Up $3.6 Billion Worth of Spectrum From Comcast, Others
Fri, 02 Dec 2011 16:03:09 GMT