Verizon carves new landscape with spectrum deal

Verizon Wireless agreed to buy $3.6bn of spectrum owned by a joint venture of Comcast, Time Warner Cable and Bright House Networks known as SpectrumCo. The result is a reshaped competitive landscape where cable and telecoms companies will be competing in some markets, but co-operating just miles away.

Commenting on the announcement, Bernstein Research analyst Craig Moffett titled his note: “The End of the World as We Know It.” Comcast and Time Warner Cable, the two largest US cable companies, now have the nation’s leading wireless provider as a partner; one of the main benefits of the deal for them is that it puts to rest speculation that they were poised to build or acquire their own wireless networks. The deal also highlights the different strategies that the US wireless telecoms groups are adopting to deal with what they perceive to be a looming spectrum crunch driven in part by the success of smartphones. US regulators are seeking to free up additional spectrum for wireless communications, but it could be several years before that is available for auction. Verizon Wireless clearly believed it could not afford to wait. As several analysts noted, the spectrum purchase should ensure that Verizon can continue to deliver what it has positioned as a premium network experience to smartphone and tablet PC users. The deal also has knock-on effects for other cable and telecoms companies. Dish Networks, the satellite TV provider, is sitting on a large swath of valuable spectrum. With SpectrumCo’s licenses now accounted for, that makes the Dish assets more valuable. “It makes Dish’s spectrum all the more scarce,” said Stefan Anninger, a Credit Suisse analyst who put a value of about $8.6bn on the Dish spectrum.