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Verizon Wireless To Pay $3.6 Billion for Spectrum Licenses

By Josh Long
December 02, 2011 - News

Verizon Wireless has inked a $3.6 billion agreement to purchase 122 spectrum licenses that cover 259 million points of presence from SpectrumCo LLC, a joint venture between Comcast Corp., Time Warner Cable and Bright House Networks.

The companies also have announced several commercial agreements that will enable the cable operators and Verizon Wireless to sell each other's products and services – meaning the cable companies will no longer be handicapped by lack of a wireless offering.

Verizon Wireless has agreed to fork over billions for spectrum at a time when federal regulators and lawmakers are grappling to find ways to free up more airwaves in order to meet the escalating demand for wireless services, driven by data and video consumption on smartphones, tablet computers and other mobile devices.

"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," the companies announced Friday. "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."

Enabling the Quadruple Play

Bright House Networks, Comcast and Time Warner Cable also will become agents to sell Verizon Wireless' products while the nation's largest mobile operator will become an agent to sell the cable companies' products. The arrangement would enable the cable TV companies to add wireless to their packages of services, which often include television, Internet and landline voice. The cable companies also will have the option of selling Verizon Wireless' service on a wholesale basis, the companies said, although they didn't elaborate on the specific arrangements. Verizon Wireless and the cable companies also have formed a joint venture in order to develop technology that better integrates wireline and wireless products and services.

"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,"  said Neil Smit, President of Comcast Cable.

The sale of the spectrum to Verizon Wireless is subject to approval by the Federal Communications Commission and review under the Hart-Scott Rodino Act as well as other customary conditions. As a majority stakeholder in the joint venture with a 63.6 percent interest, Comcast will collect $2.3 billion in the spectrum sale. Time Warner Cable, which owns 31.2 percent of SpectrumCo, will receive about $1.1 billion while minority stakeholder (5.3 percent) Bright House Networks will collect roughly $189 million.

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