Cable Companies to Resell Verizon Wireless Service
Cable companies Comcast Corp., Time Warner Cable Inc. and Bright House Networks are giving up on their dreams of creating their own wireless network, opting instead to resell Verizon Wireless service.
The companies said today (Dec. 2) that they will be selling their wireless licenses — which they haven’t been using — to Verizon Wireless for $3.6 billion, The Associated Press reported.
Cable companies have long had ambitions to get into wireless, and some of them have linked up with Sprint Nextel Corp. and Clearwire Corp. to offer service. Lately, there has been speculation that the cable companies would invest in ailing No. 3 and 4 carriers Sprint or T-Mobile USA to gain access to the wireless market.
The link-up with No. 1 carrier Verizon Wireless and the sale of the spectrum appears to preclude that kind of deal.
“It’s really hard for a cable company to expect to compete in a highly competitive wireless market,” said Time Warner Cable spokesman Alex Dudley. He pointed to Cox Communications, another cable company, which this year shut down its plans to build out a wireless network.
“We got a good price for the spectrum,” Dudley said. “An arrangement like this makes a lot of sense.”
Time Warner Cable currently resells access to Clearwire’s wireless data network as “4G” service. Dudley said it could continue to provide service to existing subscribers, but the arrangement with Verizon Wireless is exclusive, so it will stop selling to new subscribers.
Comcast, the country’s largest cable company, owned the majority of the spectrum holding company, and will get $2.3 billion from the sale. Time Warner Cable, the second-largest cable company, will get $1.1 billion. Bright House, the sixth-largest, will get $189 million.
The three companies and Verizon Wireless will resell each other’s services, so it will be possible to sign up for cable service in a Verizon Wireless store. Billing will be separate.
Verizon Communications Inc., the New York-based phone company that owns 55% of Verizon Wireless, resells satellite TV service from DirecTV Group Inc.