Verizon announced this morning it will pay $3.6 billion in radio spectrum from a consortium of cable companies.
As one industry analyst tweeted a few minutes after the announcement: “Queue whining from AT&T, Sprint, and T-Mobile in 3…2…1…”
The deal, which gives the leading wireless company in the country spectrum in areas where 259 million Americans live, was cut with SpectrumCo LLC. SpectrumCo is a group put together by the country’s largest cable companies: Time Warner Cable, Comcast Corp. and Bright House Networks.
Wireless spectrum is a finite and increasingly desired commodity. It’s become increasingly valuable as more people have been using more smartphones to push and pull more data across the Internet. It’s not hard to imagine Sprint and Verizon’s other competitors seeking regulatory action to stop the Verizon spectrum purchase out of fear that the No 1 carrier will become even more dominant.
Below is the official press release from Verizon and the cable group:
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.
The agreement comes at a time when consumer demand for wireless services and bandwidth is increasing rapidly. This sale of spectrum is an important step toward ensuring that the needs and desires of consumers for additional mobile services will not be thwarted by the current spectrum shortage. While government action to free more spectrum is expected, this transaction ensures that the spectrum which is already available for mobile services is used effectively to serve customers.
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.
Neil Smit, President of Comcast Cable, said, “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. We’re excited about this partnership with Verizon Wireless and the future innovations we will bring to consumers.”
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.”
Time Warner Cable President and Chief Operating Officer Rob Marcus said, “We’re excited to be able to offer the nation’s best wireless services to our customers and to have Verizon Wireless as a sales channel for our superb wireline services. We’re also pleased to have obtained an attractive price for the spectrum we’re selling.”
Bright House Networks CEO Steve Miron added, “We are always looking for ways to provide new and exciting product offerings for our customers. We look forward to working with our partners through these agreements toward achieving that end goal to add additional value for our customers.”
SpectrumCo’s sale and transfer of its advanced wireless spectrum to Verizon Wireless is subject to approval by the Federal Communications Commission and review under the Hart-Scott Rodino Act and other customary conditions.