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December 02, 2011

Verizon Buys Cable Spectrum for $3.6 Billion

By Tammy Wolf, TMCnet Web Editor

In a time when consumer demand for wireless services and bandwidth is rapidly increasing, wireless companies are seeking strength in numbers, and today’s newly announced agreement between several cable giants and one wireless bigwig is no different.

Verizon (News - Alert) Wireless has agreed to acquire 122 Advanced Wireless Services Spectrum licenses for a price tag of $2.6 billion, covering 259 million POPs. Spectrum is a joint venture between Comcast, Time Warner (News - Alert) Cable and Bright House Networks, a leading owner and operator of cable systems in the U.S.

According to a press release, the earnings will be divided up in the following manner: Comcast, which owns 63.6 percent of Spectrum (News - Alert), will receive $2.3 billion from the sale; Time Warner Cable, which has ownership of 31.2 percent, will earn $1.1 billion; and Bright House Networks, which possesses only 5.3 percent of Spectrum, will obtain $189 million.

Meanwhile, to accommodate the sale of various products and services, the linked companies have also formed commercial agreements that will deliver mobile products to consumers. This means Verizon Wireless (News - Alert) and the cable companies will become agents to sell one another’s products, and eventually, the cable companies will have the option to sell Verizon Wireless’ service on a wholesale basis. Moreover, an innovation technology joint venture between Verizon Wireless and the cable companies will back the development of technology to improve integration of wireless and wireless goods.

“These agreements, together with our Wi-Fi plans, enable us to execute a comprehensive, long-term wireless strategy and expand our focus on providing mobility to our Xfinity services,” said Neil Smit, president of Comcast Cable, in a prepared statement. “We’re excited about this partnership with Verizon Wireless and the future innovations we will bring to consumers.”

As for Verizon, the profit stemming from this agreement will come in the form of more LTE (News - Alert) availability.

Dan Mead, president and CEO of Verizon Wireless, said, “Americans deserve excellence from a wireless service provider, and innovative wireless companies plan ahead in order to deliver on that expectation.  Spectrum is the raw material on which wireless networks are built, and buying the AWS spectrum now solidifies our network leadership into the future, and will enable us to bring even better 4G LTE products and services to our customers.  American businesses and consumers can have confidence that the best wireless network has the foundational resources to deliver on that promise.”

Tammy Wolf is a TMCnet web editor. She covers a wide range of topics, including IP communications and information technology. To read more of her articles, please visit her columnist page.

Edited by Carrie Schmelkin

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