Verizon adds Cox's spectrum to its LTE plan
Pays $315m for the cableco's AWS licences and a cross-selling deal, achieving the capacity for a superfast LTE network
Published: 19 December, 2011
Verizon has made its fourth spectrum acquisition in as many weeks, paying $315m for AWS licences from cableco Cox to add to LTE-suitable frequencies it has snapped up from the cable consortium SpectrumCo, Leap Wireless and US Cellular.
As AT&T, hamstrung by its stalled T-Mobile bid, watches helplessly from the sidelines, its rival is getting extra capacity for LTE, in a series of transactions which should get through regulatory scrutiny far more easily than the TMo merger (though they still need to gain approval).
Cox, which cancelled its own 3G build-out plans earlier in the year, has sold 20MHz of AWS spectrum to Verizon Wireless, though not its 700MHz licences. Both Verizon and AT&T are initially rolling out LTE in 700MHz and are looking to boost their holdings in the fragmented band, which is cost effective for rural coverage in particular, AT&T is currently fighting with the FCC over roaming conditions which may be imposed on its purchase of 700MHz licences from Qualcomm.
The spectrum which Verizon is adding from Cox covers 28m POPs, but like its ground breaking deal with SpectrumCo (a joint venture of Comcast, Time Warner Cable and BrightHouse), this one goes further than simple transfer of frequencies. It also allows the new partners to sell one another's residential and commercial services, extending their footprint at low cost and disadvantaging AT&T further. Cox now expects that it will, at some stage, join the joint venture recently created by Verizon and those three cable operators to combine wireline and wireless services and integrate them into bundled packages for customers.
This marks the end of Cox's attempts to control its own destiny in wireless and quad play, and another probable blow to Sprint, which until this month has been the unchallenged wireless partner for the cable sector. Verizon's four new MSO partners all joined forces for their early wireless activities, notably with an MVNO venture called Pivot with Sprint, and with SpectrumCo. But Cox later decided to go its own way, staying out of the other three's Clearwire involvement to pursue its own network build-out plans, buying 700MHz licences, and selling its stake in SpectrumCo to Sprint. But this year decided to axe its 3G plans, citing the cost and the difficulty of accessing the best handsets. It said it would continue to rely on its old Sprint alliance, but that now looks set to dissolve over time.
"These agreements provide Cox customers with key enablers to mobility, such as access to Verizon Wireless' 4G LTE network," said Pat Esser, president of Cox Communications. "We look forward to the many benefits this will bring to customers."
Though Cox's 700MHz licences remain potentially up for grabs - and perhaps in AT&T's sights to boost its existing holdings and those it aims to acquire from Qualcomm - Verizon now has a huge collection of AWS spectrum, combining its own assets with those acquired from the four cablecos. It could have as much as 60MHz in some markets, in a band which steers the optimal path between affordable coverage and high capacity. This amount of spectrum would enable an LTE network running at three times the speed of the current offering, and Verizon has spent $4bn achieving the wherewithal for that second network, rather than the $39bn AT&T has put on the table for TMo and its licences.