The wireless business is already fiercely competitive, to put it mildly, so industry watchers are carefully scrutinizing every move cable operators make as they enter the fray. An announcement released Monday that Comcast and Charter have formed a wireless partnership agreement is certain to stir even more speculation on their ultimate strategy. A particularly interesting element of the deal is that the two companies won’t make a material merger or acquisition in wireless without the other’s consent for one year.
Conjecture has been flying for a while that a major cable company could aim to snag the likes of T-Mobile or Sprint to further wireless plays beyond the MVNO reseller agreements both Comcast and Charter have separately with Verizon. A Wall Street Journal article on Sunday night reported that neither company as a single entity would be able to purchase another wireless carrier during the year timeframe as a result of their agreement without the other’s blessing or involvement, a source “familiar with the matter” said. While the Comcast/Charter statement released Monday doesn’t put it quite so directly, it does confirm the companies have agreed “to work only together with respect to national mobile network operators, through potential commercial arrangements, including MVNOs and other material transactions in the wireless industry, for a period of one year.”
Comcast and Charter’s dual press release also states that the companies have an agreement to explore potential opportunities for “operational cooperation in their respective wireless businesses to accelerate and enhance each company’s ability to participate in the national wireless marketplace.” Areas where they’ll work together are in creating common operating platforms; technical standards development and harmonization; device forward and reverse logistics; and emerging wireless technology platforms.
“We’re looking forward to launching Xfinity Mobile to our customers in the coming weeks and are excited about this opportunity to work with Charter to explore ways we can make our respective wireless initiatives more efficient and cost effective,” Brian Roberts, chairman and CEO of Comcast says. “Both of our companies have regional wireless businesses using the same 4G LTE network, and by working together our goal is to create even better experiences for our customers.”
Comcast’s wireless service will be offered in bundled packages with the operator’s other Xfinity services. Subscribers can get up to five lines automatically included when they add Xfinity Mobile to Xfinity Internet service, with no line access fees, unlimited talk and text, and the first 100 MB of shared 4G LTE data included. More on Comcast’s plans for its soon-to-launch wireless service is here.
“At Charter, we have a tremendous opportunity in front of us in the wireless space. Within our footprint, our network is perfectly suited to provide the data-rich wireless services that customers are increasingly demanding,” Tom Rutledge, chairman and CEO of Charter, comments. “By working with the team at Comcast, we can not only speed Charter’s entry into the marketplace, it will also enable us to provide more competition and drive costs down for consumers at a similar national scale as current wireless operators.”
It’s notable that Rutledge has only just recently said the company is currently “happy” with its current MVNO agreement and isn’t worried about not picking up 600 MHz spectrum for underlying coverage in the recent FCC auction. As pointed out in this Wireless Week article, Rutledge’s comments during last week’s Charter Q1 earnings call came despite opinions from analysts like MoffettNathanson last month that the company is “left with few options for wireless outside of their Verizon MVNO,” and could be stuck “in a pickle that can only be remedied by buying a wireless operator.”
“As you know, that that low frequency opportunity is still, from a practical point of view, a number of years away. So, it has no impact on sort of a short midterm opportunity in the marketplace. We think that the MVNO does have that potential,” Rutledge commented. “And so we’re happy with our MVNO. We’re happy with going forward with it and don’t feel today that we have any need for that kind of spectrum. And we think that if we ever do have such a need that opportunities will be available and get it.”
