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Cable companies to resell Verizon Wireless service
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Comcast, the country’s largest cable company, owned the majority of the spectrum holding company, and will get $2.3 billion from the sale. Time Warner Cable, the second-largest cable company, will get $1.1 billion. Bright House, the sixth-largest, will get $189 million.
Verizon Wireless CEO Dan Mead said the company will combine the spectrum with some of its own unused holdings and launch service using the latest wireless data technology, dubbed LTE for Long-Term Evolution. The acquisition roughly doubles the number of airwaves Verizon Wireless would have available for LTE.
Mead said he expected the deal to close in the middle of next year, but didn’t say when the spectrum would be put to use.
Moffett, the analyst, said the Federal Communications Commission would probably rather see the spectrum go to T-Mobile USA. One of the reasons its German parent company wants to sell it to AT&T is that T-Mobile USA doesn’t have a lot of room on the airwaves, and can’t keep up with Verizon and AT&T when it comes to expanding wireless data capacity.
But Deutsche Telekom is unwilling to plow more money into the U.S., so an outright purchase of the cable-company spectrum has not been in the cards.
The sale to Verizon does solve one problem for the FCC, Moffett said: that the cable spectrum holdings have not been put to use yet.
Under the agreement, the cable companies and Verizon Wireless will market each others’ services. Billing will be separate, but the cable companies have the option to start selling Verizon Wireless service under their own brand in four years. Cox had a similar arrangement with Sprint, but gave it up last month, saying it was too small to compete with the big cellphone companies.
Verizon Communications, the New York-based phone company that owns 55 percent of Verizon Wireless, runs its own, competing cable-TV service called FiOS in some areas. In the rest of its local-phone territory, it resells satellite TV service from DirecTV Group Inc. based in El Segundo, Calif.
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