Comcast is reportedly looking to get into the cellphone business. Sources say the cable company has recently notified Verizon it plans to activate a years old agreement to use the carrier’s spectrum to offer its customers cell service.
Verizon made the deal with several cable companies back in 2012 in which they agreed to a $3.6 billion deal to buy spectrum from Comcast, Time Warner and Bright House Networks. As part of the deal, each of the Cable Companies was provided “with the option, after approximately four years, to become resellers of Verizon Wireless’s services.” The deal also required Verizon to sell some spectrum to T-Mobile to avoid anti-competition concerns.
In a recent earnings call, Verizon confirmed at least one of cable company was exercise its spectrum option. “We have an existing [cellular service]agreement and we were informed that they are going to execute on that agreement,” Verizon CFO Fran Shammo said on the call.
Verizon isn’t Comcast’s only option. It also has a deal with Sprint to resell services. The cable giant is expected to rely on its expansive Wi-Fi network and only use cellular when Wi-Fi is unavailable. All of this is again feeding speculation that Comcast could possibly absorb T-Mobile US, which would give it more options with regards to spectrum allocation.
“We would guess that Comcast will test a Wi-Fi first offering first using Verizon and see how it performs,” New Street Research analyst Jonathan Chaplin said. “Before rolling it out commercially I would assume they will see if they can get a better deal out of T-Mobile and Sprint, similar to Google’s (Fi service). At the same time, we wouldn’t be surprised if they take a hard look at buying T-Mobile.”
Comcast’s move into cellular allows the company to offer more diverse service such as “quad play,” which gives customers the option to bundle Internet, TV, home phone and cell service.
There is no word yet as to whether Comcast or any other cable companies will look to revise their deal with Verizon. The carrier would refused comment on the subject.
“I am not going to get into whether we are discussing revising the agreement or the terms and conditions of that since it’s under NDA and we will see how this plays out,” the Verizon CFO said. “Obviously, the industry is moving. Cable is going to do what they are going to do and we’re going to do what we’re going to do.”
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Comcast to use Verizon spectrum to offer cell service?
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