Cox sells AWS spectrum to Verizon; they agree to sell each other’s services

Fri, 12/16/2011 - 2:47pm
Mike Robuck

The other shoe just dropped now that Cox Communications announced this morning that it is selling its 20 MHz Advanced Wireless Services (AWS) licenses to Verizon Wireless for $315 million.

Cox’s licenses cover 28 million points of presence (POP). The agreement doesn’t cover Cox’s 700 MHz spectrum licenses.

"These agreements provide Cox customers with key enablers to mobility, such as access to Verizon Wireless' 4G LTE network and iconic wireless devices," said Pat Esser, president of Cox Communications. "We look forward to the many benefits this will bring to customers."

The news came on the heels of Bright House Networks, Comcast and Time Warner Cable agreeing earlier this month to sell their wireless spectrum, which was held under the SpectrumCo joint venture, to Verizon Wireless for $3.6 billion.

The Cox/Verizon Wireless deal mirrors the previous announcement, in that Cox and Verizon Wireless also agreed to resell each other’s residential and commercial products. The stipulation is also in place that Cox may end up selling Verizon Wireless’ services on a wholesale basis down the road.

Cox also gets the keys to enter into the Philadelphia-based innovation technology joint venture with Verizon Wireless, Comcast, Bright House Networks and Time Warner Cable. The joint venture was formed to better integrate wireline and wireless products and services.

Prior to today’s deal, the joint venture was 50 percent owned by Verizon Wireless, while Comcast, Time Warner Cable and Bright House owned the other 50 percent stake.

Sam Schwartz, president of Comcast Interactive Capital and executive vice president of strategy and development at Comcast Interactive Media, will lead the strategic and creative direction of the joint venture in Philly, while Tony Heyman, vice president of new market development for Verizon Wireless, will lead the operations.

Today’s news seems to be the endgame for Cox in regard to providing its own cell phone service. Last month, Cox announced it was shuttering its 3G service that was provisioned through Sprint Nextel’s network.

Earlier in the year, Cox also abandoned the build-out of its own 3G network after several years of work.

Cox, an early leader in providing a cable-based phone service, first announced it would pursue its own wireless plans in 2008. It acquired wireless spectrum, which included both 700 MHz and AWS spectrum, from Federal Communications Commission auctions in 2006 and 2008. Cox spent more than $550 million for radio spectrum licenses to support its wireless plans, but the company's plans for its wireless network were constantly behind schedule over the past few years.

At the SCTE Cable-Tec Expo last month, Cox Communications executive vice president and CTO Kevin Hart said during the MSO CTO panel that enabling Wi-Fi around larger footprints and having a high-speed mobile data solution were two areas that Cox was working on. Clearly, the Verizon Wireless deal enables the latter for Cox.

Other implications of the deal could include TV Everywhere-type services across the various devices provided by the cable operators and Verizon Wireless.

Repercussions for AT&T
There is fallout for AT&T, as well. AT&T also wants to add to its AWS A- and B-block holdings by purchasing D- and E-block licenses from Qualcomm, which shortly after the AWS auction in 2006 tried and failed to establish a wireless broadband TV service. Federal approval of AT&T’s purchase of Qualcomm’s spectrum has been held pending review of AT&T’s proposed acquisition of T-Mobile.

The MSOs’ sales of their spectrum to Verizon has incited speculation that AT&T would continue its wheeling and dealing with an attempt to buy the largest remaining chunk of unused AWS spectrum remaining that is compatible with AT&T’s network. Those licenses are held by Dish Network, whose stock has been climbing since Comcast, TWC and BHN sold their spectrum to Verizon two weeks ago in response to such speculation.

Charter next?
Charter Communications CEO Mike Lovett said at a recent investor conference that his company would be interested in striking a similar deal with Verizon Wireless. If that happens, five of the top six cable operators in the nation – all but Cablevision – will have deals in place with Verizon Wireless.


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