Competitors Bright House, Verizon join in $3.6 billion deal
TAMPA, Dec 03, 2011 (Tampa Tribune - McClatchy-Tribune Information Services via COMTEX) --
The crunch of everyone suddenly using their new smartphones is creating some strange bedfellows in the wireless industry.
Bright House Networks and other cable TV companies that normally compete with Verizon for customers are selling a wide swath of wireless spectrum to Verizon's Wireless arm for a lump sum payment of $3.6 billion. Ultimately, the deal means Bright House could end up with a $189 million payout as well as a deal to market Verizon Wireless phones in Tampa Bay, company officials said.
The deal centers on the sale of wireless spectrum, the roadway cellular networks use to connect their antenna towers to individual customer phones for making calls and transferring data. A shortage of spectrum has two forces intersecting.
Cellular companies such as Verizon Wireless seek more wireless space to handle the millions of smartphone-buying customers, who gobble up data downloads checking Facebook pages, shopping online and uploading video clips.
And cable TV companies bought huge amounts of spectrum years ago to get in on that action. So far, however, Bright House has yet to start using that spectrum beyond initial tests. Now Bright House and other cable companies are turning the spectrum into cash.
"This looks like it is the end of the line for the cable television industry trying to be a player in the wireless space using their own networks," partly because the cellular business simply moved too fast for the consortium to keep up, said Atlanta-based telecom analyst Jeff Kagan.
Verizon's chairman and chief executive, Lowell McAdam, had long eyed the spectrum held by cable companies. In an interview with The Tampa Tribune in May, he talked about spectrum shortages that prompted AT&T to go after rival T-Mobile.
"All you have to do is take a look at the cable consortium that bought a huge swath of what we call AWS spectrum about 10 years ago," McAdam said. "There hasn't been one customer on that spectrum. We bought spectrum about two years ago, and we have hundreds of thousands of customers on that spectrum today."
Specifically, this new deal calls for Comcast Corp., Time Warner Cable and Bright House Networks to sell for $3.6 billion the 122 spectrum licenses held by their cooperative pool and covering potentially millions of phones. That spectrum potentially covers 75 percent of the U.S. population. Because Bright House owns 5.3 percent of the pool, it could pocket $189 million from the sale.
The deal is still subject to some regulatory approval, and federal regulators recently have been taking a hard look at cellular deals to ensure they don't squelch competition.
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