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The Department of Justice may worry that the disappearance of T-Mobile would reduce US wireless competition, but the real threat of a duopoly situation is seen in Verizon Wireless's latest spectrum buy. It will pay $3.6bn for the licences held by a consortium of cablecos called Spectrumco, a deal which - unlike AT&T's proposed purchase of TMo - should pass regulatory scrutiny because no competitors disappear. But not only does it make the ascendant Verizon even harder to catch in LTE - with AT&T hobbled by its TMo impasse - but it sees the major cable operators, Comcast and Time Warner Cable, shifting allegiance from Sprint.

The decision to sell their AWS licences, acquired in 2006, is no surprise. The cablecos once dreamed of building their own wireless networks to support their need for a quad play offering to rival those of Verizon and AT&T. But they soon realized that the expense, risk and sheer spectrum capacity needed for 4G would be beyond them, and when Cox halted its 3G build-out earlier this year, it was clear that the cable majors would have to rely on partnerships for their wireless angle. The Spectrumco licences were one of the largest chunks of high value spectrum still likely to come to market, so they are a good win for Verizon, at a time when AT&T is prevented from bidding because of its ongoing TMo cases (Verizon has taken advantage of its rival's predicament several times, as when it engaged in a spectrum exchange with Leap last month).

Not only does Verizon gain additional capacity for LTE without the pain and risk of a major acquisition like AT&T's, but it removes what could have been an option for a second tier player such as MetroPCS to increase its own self-sufficiency in mobile broadband. But even sweeter for Verizon is that Comcast, TWC and Brighthouse will also stop reselling Clearwire's 4G services in mid-2012, presumably to ride on the larger carrier's LTE network. Despite all the competitive issues between Verizon and the cablecos, they have mutual interests too, and there are extensive cross-marketing arrangements in their new deal. These will weaken the cornerstone of Sprint's strategy to survive as a major third player - its wholesale business, in which it has traded on the fact it did not have the same conflicts of interest with cable as Verizon or AT&T, with their extensive wireline broadband and TV interests.

Details of the operating agreement between Verizon and the cablecos are sparse so far, but there are extensive options for the unlikely partners to sell one another's services. The cablecos will immediately be able to sell Verizon services as part of a quad play bundle, while Verizon Wireless will sell their broadband, TV and voice services in its retail stores. This deal can even include marketing cable services in areas where Verizon competes with its Fios offering. And from the end of 2015, the cablecos will be able to access all of the Verizon Wireless network at wholesale rates in order to support their own wireless services and brands, replacing the Sprint partnership.

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