Verizon (News - Alert) Wireless and Cox Communications have agreed to a deal that would give Verizon Wireless all of Cox’s advanced wireless spectrum in exchange for $315 million and an agreement to sell each other’s services.
The 700 MHz spectrum covers potential users in areas where Cox Communications operates fixed networks.
Verizon Wireless (News - Alert) will get a 20MHz block of wireless spectrum from Cox, while Verizon Wireless and Cox will resell each other’s residential and commercial services. The deal is similar in scope to one Verizon Spectrum Co., owned by Comcast, Time Warner (News - Alert) Cable, and Bright House Networks.
The deal is said to be very similar to one that Verizon struck with Comcast, Time Warner Cable and Bright House networks in early December 2011. Verizon, Cox in spectrum, resale deal
Aside from the other potential ramifications, such as a bigger move by those cable operators into the wireless services market, the deal essentially changes the strategic landscape which since 1994 or so has had Sprint aligned most closely among the mobile companies with leading cable operators.
The deals also would seem to remove the leading U.S. cable companies from the list of potential investors or buyers of assets including Sprint and Clearwire (News - Alert), as well as from the ranks of potential wholesale customers of LightSquared, Sprint or Clearwire.
The ultimate ramifications are hard to foresee, but many are going to speculate that the deals collectively indicate a belief by leading cable companies that is too late, too expensive or too unrewarding to create a "cable-owned" wireless capability.
At the same time, cable companies might also believe that the tasks of creating "full service" enterprise services, as opposed to smaller business voice and data bundles, are challenging enough that a widespread ability to sell Verizon services, on what appears to be an agency basis, is a better approach to serving enterprise customers.
Larger multi-site customers often have requirements outside any single cable company's footprint, which complicates enterprise voice and data sales. Presumably the ability to represent Verizon's global network will help, in that regard.
So the primary advantages for the cable operators would seem to be "in territory," where the cable companies have fixed network video, voice and broadband operations.
The advantages for Verizon Wireless, aside from having cable companies as distributors, might include product advantages outside of its own fixed network territory though. Where its partners operate, Verizon Wireless could bundle its own wireless voice and broadband (using the new Long Term Evolution network, especially) products with a cable video offer, much as it now resells DirecTV in region.
Of course, as newer products are developed, the deal could benefit all the partners in any areas where the firm assets are complementary.
Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.
Edited by Rich Steeves