Charter and Comcast Team Up for Wireless
Both Charter and Comcast plan to offer wireless phone service soon in the United States. However, neither is particularly ready to offer truly wireless infrastructure and both are relying on contracts with Verizon Wireless—the largest wireless provider in the U.S.—for additional coverage outside of existing Wi-Fi networks. The agreement between cable companies is written to last one year and covers only "material transactions".
Material transactions are exchanges involving assets and liabilities. Essentially, they're B2B. Such a deal between Charter and Comcast has some observers wondering if they'll attempt to jointly acquire T-Mobile or Sprint.
Each of the two cable companies will offer wireless service to customers independent of each other, and there are no current plans to create any type of spin-off venture. Charter will likely brand wireless services under their Spectrum brand (this is how Charter is branding their recently acquired Time Warner and Bright House Networks assets), and Comcast, of course, will brand their services under the already announced Xfinity Mobile.
From a technology perspective, it is interesting that cable companies are choosing to enter the wireless space. Certainly, they are feeling pressure as companies like Verizon expand their march into content through acquisitions. Verizon has acquired both AOL and Yahoo!, whereas AT&T, the second largest wireless network in the U.S., has acquired satellite television provider DirecTV.
Expansion into content is one thing, but the leveraging of existing assets is another. Charter and Comcast are both planning to base their wireless networks primarily around their already available—and arguably extensive enough—public Wi-Fi networks. Redundant wireless service is to be provided through each individual company's aforementioned deal with Verizon Wireless.
It is only a matter of time before Verizon, Charter, and Comcast find themselves in head-to-head competition, with AT&T rounding out the field thanks to their ownership of DirecTV. Infrastructure only companies, whether wireless or cable in nature, had better pay attention to this deal and observe how it unfolds very closely.
One of the larger concerns that these partnerships (which lead to possible acquisitions) brings to the table from the business perspective is the possibility of decreased competition and therefore a reduction of consumer protections, especially in the current era of deregulation. This will especially be true if acquisitions do result from this type of deal between near-monopolies as their Title II status is unfortunately in question yet again, challenging the tenants of net neutrality.
What are your thoughts?
Let us know in the comments section below!