Verizon Wireless is buying $3.6 billion worth of wireless spectrum from Comcast, Time Warner Cable, and Bright House Networks. This will allow Verizon to further build their LTE network. As part of the deal, the three cable companies will become mobile virtual network operators on Verizon. Verizon may also become a cable virtual operator or agent outside of their wireline territory to sell home broadband, TV, and phone services.
Verizon will become the owner of the SpectrumCo Advanced Wireless Service (AWS) licenses that covers much of the cable company territory in the lower 48 states. Verizon is paying a $1.2 billion premium over the $2.4 billion that the cable operators bid at auction for the spectrum in 2006.
Verizon’s Advanced Wireless Service spectrum is currently unused, but the company is targeting the spectrum for the next phase of LTE deployment. Verizon will be able to build another LTE network parallel to its current 4G network at 700MHz.
Verizon will still have to receive regulatory approval for this deal to take place. AT&T has been unable to receive approval for its proposed acquisition of T-Mobile. However the FCC is close to approving AT&T’s acquisition of Qualcomm’s 700MHz spectrum so it is likely that they will approve of a similar deal for Verizon.
This deal could strain the relationship that the three cable companies have with Clearwire. Comcast, Time Warner, and Bright House are major investors in Clearwire and they have already started reselling their broadband service on a limited basis in their territories.