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Verizon to buy Cox spectrum to remake its broadband model

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Verizon wants to ensure you can hear people in ten years.

Verizon Wireless (s vz) (s vod) has agreed to purchase some of Cox Communications’ wireless spectrum in a deal valued at $315 million. And once again, Verizon shows AT&T exactly how it’s done when it comes to getting more airwaves without setting off a huge government production. Verizon will not only buy the airwaves, but it is also signing an agreement to resell Cox’s services and possibly to let Cox resell Verizon’s service under its own brand name.

With this deal, and the large spectrum buy announced earlier this month, Verizon looks like it’s ready to focus on its wireless business and let its residential wireline business stagnate. Given its reorganization of its enterprise business this week, my bet is its wireline investments in fiber will be deployed to benefit its wireless towers and its enterprise datacenters providing cloud services.

Verizon, which agreed earlier this month to spend $3.6 billion buying 20-megahertz blocks of spectrum that belonged to a consortium of cable companies (Time Warner Cable, (s twc) Comcast (s cmcsa) and Bright House Networks), will buy 20 MHz of Advanced Wireless Services (AWS) spectrum licenses covering 28 million people from pay TV provider Cox. This spectrum is the same type that Verizon acquired earlier this month, and the resale and other agreements that let Verizon and Cox resell each others’ products look similar.

The competitive implications of this could be profound, as Verizon locks up more airwaves and secures its No. 1 position in the wireless market, while appearing to cede the wireline market to the cable guys. Does this mean Verizon is done deploying FiOS? It certainly means the cable guys aren’t going to compete in the wireless market anytime soon.

This is also the same spectrum that AT&T (s t) was hoping to use for its LTE deployment if its purchase of T-Mobile went through. Cox also has some 700 MHz spectrum licenses, which Verizon isn’t buying.

Cox had planned to use its airwaves to build out a wireless network, but realized how challenging such an endeavor would be, and in November pulled the plug on any form of quadruple play that would include the web, voice, video and wireless. When the Cox wireless network’s demise was rumored, I wondered who would buy Cox’s airwaves, thinking perhaps it could partner with Sprint. (s s) But now it looks like Verizon has locked up not just enough spectrum for one LTE network in its 700 MHz band, but has now spent roughly $4 billion buying enough to deploy an entirely separate network in the AWS band.

If the FCC approves this deal, Verizon has just spent far less than AT&T proposed to do and took out a potential competitor that could have grown even stronger than T-Mobile USA. The cable companies’ decision to decamp from the wireless market, despite owning their airwaves,also shows how hard building a network can be. If the cable guys don’t have the heart, it’s hard to see LightSquared or even Dish succeeding without some serious support from the few nationwide carriers still left on the field.

5 Responses to “Verizon to buy Cox spectrum to remake its broadband model”

  1. Strange to hail one monopoly buying out another, leaving us with less competition, which has been cursing our overall services for the past few decades. Verizon is not a good company, nor are the other behemoths. I signed on with Clear’s 4G. While the service has been so-so, the tech support has been dismal. There seems to be no hiding from monopolies. When will we have that which made our country so unique again? Competition and value for service. How does this “deal” add to our choice? And the FTC just sits idle. As Spock would say: “Fascinating!”

  2. Verizon = corporate greed. I don’t care how big or smart a company is – the fact that they continue their price-gouging on consumers while manipulating the FCC like some sock puppet is a sickening shame. Consumers want competition, not be told by some corporate fat cat what they can and cannot do with their smartphone.

  3. Andrew J Shepherd

    Hi Stacy…

    This Cox AWS 2100+1700 MHz spectrum acquisition by VZW was to be expected; it is really just a follow up to the SpectrumCo AWS purchase. As Cox was originally part of the SpectrumCo consortium, it acquired this AWS spectrum when it exited the partnership. In short, all of these Cox AWS licenses were originally assigned, partitioned, and/or disaggregated from the SpectrumCo lot of licenses won at FCC Auction 66 in 2006. So, the SpectrumCo and Cox acquisitions this month work to reconstitute the original SpectrumCo license collection.

    While the auction was concluding five years ago, I created several maps to track the wining bidders and their spectrum. For SpectrumCo and its original 137 AWS licenses, follow the link:


  4. How much does Verizon pay you to show them so much love while always hating on AT&T? Verizon may be smarter, but they’re every bit as evil. Why no big rants about anticompetitiveness when the number one carrier gets even bigger, but everyone panics when number two tries to compete with them? A duopoly would be better than a monopoly.