Verizon Wireless to buy cable airwaves for $3.6-billion




The deal, which must be approved by federal regulators, will better position Verizon to compete with rival ATT, which is trying to salvage its $39-billion bid to buy T-Mobile USA. The Justice Department has filed an antitrust suit to block the ATT deal.

“This is a strategic masterstroke for Verizon,” said Sanford C. Bernstein analyst Craig Moffett. “Verizon just ran off with the last pretty girl in the bar.”

The transaction gives Verizon, the nation’s largest mobile phone company, advanced wireless spectrum that covers 80% of the country and reaches about 259 million people. It gives the cable companies a gain of more than $1.3 billion on airwave licenses it bought at a 2006 government auction.

Wireless carriers like the advanced wireless spectrum because it will allow them to provide customers with faster and more sophisticated services, including high-definition video, social networking and location-based services. And ATT and Verizon have long worried about limits they could hit as the amount of available wireless spectrum runs low.

In late October, the Federal Communications Commission warned that a potential “spectrum crunch” could lead to slower wireless service and higher mobile prices for consumers.

The terms of the deal also call on the cable firms — Comcast, Time Warner and Bright House Networks — and Verizon to sell each others’ services.

In Southern California, Time Warner Cable will start offering its subscribers Verizon Wireless service along with its own cable and broadband packages. Verizon will offer broadband and video services to its customers.

Sanford C. Bernstein’s Moffett called it a “partnership between formerly mortal enemies.”

Public Knowledge, a media watchdog group, gave a partial thumbs up to the sale. But the companies’ plan to market each others’ products raised a red flag with the group.

“If this deal becomes a way for the companies to coordinate their product offerings to avoid competition … that would obviously be a bad outcome,” said Public Knowledge Legal Director Harold Feld.

For the cable industry, the sale is a recognition that its own entry into the wireless communications business was a misguided strategy. The concept was that the cable companies could offer bundles of services: pay television, broadband Internet, landline phone and wireless.

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Article source: http://articles.latimes.com/2011/dec/02/business/la-fi-1203-ct-cable-wireless-20111203

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