Verizon Strikes Spectrum, Resale Deal with Cox Communications

Verizon Wireless and Cox Communications have agreed to a deal that would give Verizon Wireless all of Cox’s advanced wireless spectrum in exchange for $315 million and an agreement to sell each other’s services.

Verizon Wireless will get a 20MHz block of wireless spectrum from Cox, while Verizon Wireless and Cox will resell each others residential and commercial services. The deal is similar in scope to one Verizon Spectrum Co., owned by Comcast, Time Warner Cable, and Bright House Networks.

The deal is said to be very similar to one that Verizon struck with Comcast, Time Warner Cable and Bright House networks in early December 2011. Verizon, Cox in spectrum, resale deal

Aside from the other potential ramifications, such as a bigger move by those cable operators into the wireless services market, the deal essentially changes the strategic landscape which since 1994 or so has had Sprint aligned most closely among the mobile companies with leading cable operators.

The deals also would seem to remove the leading U.S. cable companies from the list of potential investors or buyers of assets including Sprint and Clearwire, as well as from the ranks of potential wholesale customers of LightSquared, Sprint or Clearwire.

The deal also means a significant strategic change for the leading cable companies, which since 1994 have worked with Sprint as a wireless partner. The deal seems to signal that the leading cable firms are "changing horses" for reasons that have to be related to both long-term strategic concerns and evaluations of the respective strengths of potential partners.

At a fundamental level, the deals seem to signal a belief by U.S. cable executives that it simply is too late, too hard, too unrewarding to create a "cable-owned" wireless company. The way the deals appear to be structured also imply that cable companies will simply resell Verizon Wireless for a period of years before considering any further retail branding under their own brand names, if indeed that ever is seen as the better and more logical approach to the market.

For Verizon Wireless, the deals also seem to signal a willingness to use the cable partnerships to create new quad-play services "out of fixed network region," to the extent that Verizon Wireless would have the right to bundle cable partner video, fixed broadband or fixed network voice in areas where Verizon does not operate its own fixed networks.