Will Verizon’s Moves Blur Boundaries Between Cable and Wireless?
New Jersey’s own Verizon Wireless (Basking Ridge) has been on a rampage this month, making announcements that could affect the cable and wireless industries’ futures and blurring boundaries between the two. The company has also put its toes in some other tantalizing areas.
First, and most important, earlier this month Verizon announced it would buy unused wireless spectrum from three cable companies—Comcast Corp. (Phila.,Pa.) Time Warner Cable Inc. (New York, N.Y.) and Bright House Networks (Syracuse, N.Y.), which operate under an umbrella called SpectrumCo. LLC—for $3.6 billion. Some analysts believe this purchase will come under government scrutiny for some of the same reasons the AT&T-T-Mobile; merger ran into trouble with the FCC: it makes Verizon Wireless too big and influential, possibly stifling competition. However, others say the FCC will act favorably on behalf of the spectrum purchase, demonstrating its willingness to see scarce unused spectrum finally deployed commercially.
[Update: Late last week Verizon spent another $350 million to purchase spectrum licenses from Cox Communications (Atlanta, Ga.)]
As part of the announcement, Verizon and the cable companies have agreed to sell one another’s products. For those companies this is something of a coup. As Todd Spangler said in the Multichannel News Mobile Mashup blog, “The deal provides [cable companies] a path to wireless in perpetuity—without having to fork out billions.” Independent telecom analyst Jeff Kagan is quoted in Computerworld.com as saying, “This looks like it is the end of the line for the cable television industry trying to be a player in the wireless space using their own networks.” Brian Stelter, in the New York Times Media Decoder blog, adds the deal foreshadows “the possibility of cable television, broadband, home phone and cellphone service someday appearing on a single monthly bill.”
Second, a sidelight of the agreement between the cable companies and Verizon Wireless is the formation of a joint venture for “innovation technology,” which will probably explore new products integrating cable and wireless technology. The JV could be based in Philadelphia, according to some reports.
Third, shortly after the announcement Verizon said it would end its wireless LTE partnership with DirecTV Inc. (El Segundo, Calif.) and stop building out FIOS television and Internet services in the coming years.
Finally, Verizon has caused a public brouhaha by choosing not to put Google Wallet on Samsung Galaxy Nexus cellphones now. The company has always been cautious about what applications it includes on its phones, saying that in the past it put the network’s integrity first; however, various sources see this move as Verizon’s blocking the Google app.
In a statement, Verizon spokesperson Jeffrey Nelson said, “Recent reports that Verizon is blocking Google Wallet on our devices are false. Verizon does not block applications. Google Wallet is different from other widely-available m-commerce services. Google Wallet does not simply access the operating system and basic hardware of our phones like thousands of other applications. Instead, in order to work as architected by Google, Google Wallet needs to be integrated into a new, secure and proprietary hardware element in our phones. We are continuing our commercial discussions with Google on this issue.”
Suspicions have arisen that Verizon could be blocking the Google product because Verizon is involved in its own mobile wallet joint venture, called Isis, with AT&T; Mobility LLC (Dallas, Texas) and T-Mobile USA Inc. (Bellevue, Wash.). The JV has made agreements with several credit card companies and is said to be gearing up for a 2012 rollout.
[This story was also updated to reflect AT&T;’s withdrawl from its merger with T-Mobile.]