Verizon pays $3.6 bn to buy spectrum from cable firms

Dec 04, 2011 by Paul Handley
Verizon Wireless is the largest US cellphone carrier,
US cellphone giant Verizon Wireless will pay $3.6 billion to buy spectrum from Comcast and two other communications groups, a move that will bring it new paths to access 259 million consumers.

US cellphone giant Verizon Wireless said Friday it will pay $3.6 billion to buy wireless spectrum from three leading cable providers which are bowing out of plans to plunge into the cellphone business.

But at the same time, Verizon and the three -- , Time Warner Cable and Bright House Networks -- will begin cross-marketing their services, in a move that further closes the gap between two sides of the phone, Internet and entertainment carrier business.

The country's largest carrier, Verizon Wireless will pick up 122 Advanced Wireless Services (AWS) spectrum licenses from SpectrumCo LLC, a joint venture of the three big providers of cable television, Internet and telephone land line services.

Verizon said the airwaves would open up access to 259 million potential customers for its newest generation 4G LTE wireless service.

"Spectrum is the raw material on which are built, and buying the AWS spectrum now solidifies our network leadership into the future," said Dan Mead, president and chief executive of .

The three cable companies meanwhile were giving up their effort to push into the hard-to-crack US cellphone business, dominated by Verizon, AT&T and Sprint.

They said they earned a good return on the investment into the wireless spectrum licenses, bought in an US government auction in 2006 for $2.4 billion but never made use of.

is "pleased to have obtained an attractive price for the spectrum we're selling," said president Rob Marcus.

Instead the three have reached agreements with Verizon to cross market products, meaning a company like Comcast will be able to add Verizon cellphone services to the bundle of and Internet and land line phones it currently offers home subscribers.

In four years the could begin buying Verizon's wireless service in bulk and selling it to their customers under their own brand.

While the deal preserves Verizon from a direct assault on its business from the , it also bridges the gap between the two sides as consumers increasingly turn to wireless services for entertainment like movies once only available via cable at home.

"There's no question that we live in a world that is becoming more connected and more mobile every day," Comcast Cable president Neil Smit said in a statement.

"These agreements enable us to execute our long-term wireless strategy and expand our focus on providing mobility to our Xfinity services, to give customers even more ways to experience entertainment, communicate and connect."

The sale remains subject to the approval of the Federal Communications Commission, which has recently expressed concern about the lack of competition in cellphone services, opposing a merger between AT&T and fourth-ranked T-Mobile.

Explore further: FCC to propose pay-for-priority Internet standards (Update)

add to favorites email to friend print save as pdf

Related Stories

Cox kills Sprint-based cellphone service

Nov 16, 2011

(AP) -- Cox Communications, the country's third-largest cable company, stopped offering cellphone service Wednesday, saying it's too small to compete with the big phone companies.

Verizon Wireless to pay $25M for spurious fees

Oct 28, 2010

(AP) -- Verizon Wireless has agreed to pay $25 million to the U.S. government and at least $52.8 million in refunds to customers who inadvertently racked up data charges on their phones over the last three years, federal ...

Recommended for you

Internet TV case: US justices skeptical, concerned

Apr 23, 2014

Grappling with fast-changing technology, U.S. Supreme Court justices debated Tuesday whether they can protect the copyrights of TV broadcasters to the shows they send out without strangling innovations in ...

Hundreds in Mexico protest telecommunications law

Apr 23, 2014

Hundreds of students and activists marched in Mexico's capital Tuesday to protest a telecommunications law being debated by the Senate that they say will allow the government to arbitrarily censor Internet content.

User comments : 0

More news stories

Google+ boss leaving the company

The executive credited with bringing the Google+ social network to life is leaving the Internet colossus after playing a key role there for nearly eight years.

Facebook woos journalists with 'FB Newswire'

Facebook launched Thursday FB Newswire, billed as an online trove of real-time information for journalists and newsrooms to mine while reporting on events or crafting stories.

Genetic legacy of rare dwarf trees is widespread

Researchers from Queen Mary University of London have found genetic evidence that one of Britain's native tree species, the dwarf birch found in the Scottish Highlands, was once common in England.