SpectrumCo, a joint venture between Comcast, Time Warner Cable, and Bright House Networks, is selling over 122 Advanced Wireless Services spectrum licenses, which covers 259 million POPs, to Verizon Wireless.
Spectrum is a heavily contested commodity at the moment. For example, not having enough of it is one of the points that AT&T is using to defend its $39 billion proposed bid for T-Mobile USA.
The incentive for Verizon here is that this purchase could significantly boost its network capacity as more and more customers use Internet-connected -- especially mobile -- devices for streaming high-definition content. Such content requires more speed, and customers are coming to expect that as a given these days.
Thus, Verizon has made a serious commitment to this space of spectrum for the hefty price of $3.6 billion -- once the deal is approved by the Federal Communications Commission.
Here's how SpectrumCo breaks down by ownership and revenue from this deal:
- Comcast owns 63.6 percent and will receive approximately $2.3 billion from the sale.
- Time Warner Cable owns 31.2 percent and will receive approximately $1.1 billion.
- Bright House Networks owns 5.3 percent and will receive approximately $189 million.
However, the deal doesn't end with the signing of some major checks.
The agreement also stipulates that the trio of cable companies will be able to use Verizon Wireless as a sales channel for its products, such as Comcast's Xfinity video-on-demand network. On the flip side, Verizon could sell content owned by these cable companies through its own channels.
The last piece of the puzzle calls for a coalition between the members of SpectrumCo and Verizon to focus on a joint venture for the development of technology to better integrate wireline and wireless products and services.
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