Verizon Wireless has just announced that it’s purchasing 122 Advanced Wireless Services (AWS) spectrum licenses covering 259 million POPs in the US. Big Red has entered into the deal with SpectrumCo, a JV of cable companies majority-owned by Comcast, but with 31.2% participation of Time Warner Cable and small presence from Bright House Networks. What exactly is the newly acquired AWS-1 spectrum good for? Verizon CEO Dan Mead explained:
“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.”
Comcast will get $2.3 million out of the deal, while Time Warner gets $1.2 billion and Bright House will be paid $189 milliion. The agreement actually covers a bit more than just spectrum - under its terms each of the companies will be able to sell services of the others and in the future it’s possible that the cable providers could sell Verizon services.
As you probably know, currently T-Mobile offers data services using AWS bands, so the 122 licenses could have been a great asset in the company’s effort to extend its 4G network. If Verizon Wireless gets the institutional green light for the deal, this leaves T-Mo in a difficult position with little choice. Interestingly, the $4 billion AT&T was supposed to give to T-Mobile in case the AT&T-T-Mobile merger doesn’t pass, would have fit the bill perfectly.
PHILADELPHIA, PA; BASKING RIDGE, NJ; NEW YORK, NY; and ORLANDO — 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.