Biggest U.S. ISPs Strike Deal on Mobile

Comcast Corp. and Charter Communications, the two largest U.S. cable operators, and the largest and second-largest U.S. internet service providers, have agreed to explore ways to work together in the mobile business nationwide.

As a practical matter, the agreement seems immediately focused on scale economies that will help both firms acquire phones at better prices, even if the agreement also “intends to explore potential areas for operational cooperation” such as common billing and operating platforms, technical standards development and harmonization, handset and tablet device life cycle management including forward and reverse logistics, and emerging wireless technology platforms.

The two cable companies also agreed that if they want to strike a deal with a mobile  provider other than Verizon or buy a mobile company within the next year, they have to do it together.

That will strike some as a clue to a more-substantial deal, particularly an effort to acquire one of the four U.S. mobile service providers outright. Others will argue the chances of a federated approach--where Comcast and Charter create a joint venture to acquire a mobile asset--working are low, for reasons related to the rareness of successful deals of that type overall, and the specific corporate culture within the cable industry, where managements are used to full control within their geographic territories.

The deal essentially means neither company can make a move (acquisition, merger, joint venture) in the mobile space involving more than about $200 million, without the other firm’s consent.
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