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Updated. Regulators haven’t yet approved Comcast’s(s cmsca) spectrum sale to Verizon Wireless(s vz)(s vod), but the two aren’t waiting to cement their newfound friendship. The country’s largest mobile operator and largest cable provider are bringing their “quadruple play” service to San Francisco and the Bay Area, according to the San Jose Mercury News. In the process, they’re poking a needle in the eye of mutual enemy AT&T(s T).
In its early stages the partnership is more a co-marketing arrangement than a full-bore integration of services. Verizon and Comcast will try to entice Bay Area residents to simultaneously sign up for a mobile phone plan and a combination of Xfinity home broadband, TV and voice services. In exchange, they’re offering those customers a free smartphone — or at least a $100 to $300 Visa prepaid card with which to buy one.
But Verizon and Comcast plan to get much closer in the future. Verizon has practically written off residential broadband — a move AT&T may be making as well — electing instead to use Comcast and Time Warner Cable(s twc) as its wired point of entry in areas where it hasn’t launched its fiber-to-the-home FiOS service. Those partnerships will not only allow Verizon to avoid fighting the losing battle between DSL and cable broadband, but also expand its presence in the home beyond its Bell operating territories. In exchange, Comcast and Time Warner get access to the voice and mobile broadband networks they were never able to build themselves.
Verizon and Comcast offered similar promotions in Seattle and Spokane, Wash., and Portland, Ore., earlier this month. But the San Francisco launch is a bit special, because it strikes right in the heart of AT&T’s U-Verse territory. AT&T is pursuing its own quad-play services in the Bay Area using high-speed DSL fed by fiber-to-the-node to deliver digital TV programming along with home voice, mobile and broadband. After overcoming objections from the city of San Francisco, AT&T managed to build a U-Verse footprint passing 1 million homes last year.
Just as AT&T is starting to ramp up its quad-play service, Verizon and Comcast are coming in for the kill, offering faster home broadband and, by most accounts, more reliable wireless service. It won’t be long before we start seeing this pattern repeated in U-Verse markets all over the country.
Update: The U.S. Senate has taken an interest in Verizon’s new cozy relationship with the cable operators. Sen. Herb Kohl (D-Wis.), chairman of the Antitrust, Competition Policy and Consumer Rights subcommittee, said he would hold hearings on the controversial cross-marketing agreements later this month, the Washington Post reported. Verizon’s purchase of the cable operators’ spectrum may also face antitrust scrutiny from a rejuvenated Department of Justice, fresh off its win over Ma Bell in the AT&T-Mo battle. No matter how sweet the cable partnership is for Verizon, it needs that AWS spectrum more, using it to fuel its future LTE expansion. The last thing it wants to do is anger regulators and lawmakers while the sale is still in the works. Maybe picking a very public fight with AT&T in the cradle of U.S. technology was not the smartest move in hindsight.