Fallout from SpectrumCo’s Verizon Wireless Deal

The industry continues to experience fall-out from Verizon’s recently announced spectrum purchase and joint sales, technology and marketing partnership with the cable industry. Comcast is moving quickly. While the spectrum sale will likely take up to 12 months to receive regulatory approval, Comcast Cable President Neil Smit announced last week that the cable company will begin bundling Verizon Wireless services in four markets in early 2012. ”The teams are already engaged; they are great commercial arrangements and we think we’ve put together great packages that combine the best of the various bundles,” Smit said, while speaking at a UBS investor conference. The offerings may not be a quad-play of wireless, video, voice and data. Instead, Comcast may offer a triple-play containing three of the above products and/or a home security component. “It offers us a couple of different combination plays and ultimately more choice for the consumer,” Smit said. He also confirmed that Comcast will continue to compete with Verizon Wireless’ parent company Verizon Communications in markets where it offers its FiOS TV and Internet service. In addition, Time Warner Cable also is pro-actively incorporating existing Verizon Wireless products into its bundled packages, starting almost immediately. However, speaking at the same investor conference, Time Warner Cable Chief Financial Offer Irene Esteves said it was too soon predict what new products it might bring to market with Verizon Wireless, or when those products will be available. In related news, Clearwire is facing major repercussions from the spectrum deal. As you might remember, back in 2008, Comcast, Time Warner Cable, Bright House, Intel and Google invested in Clearwire. The plan was for the cable companies to utilize Clearwire’s planned nationwide WiMax network as the mobility component of their bundled packages. Unfortunately things did not go as planned. Clearwire’s funding did not stretch as far as it has planned, and new technologies such as LTE surpassed WiMax. All of the cable partners declined to continue funding Clearwire, which received a last minute cash infusion from its largest partner Sprint just last month. As expected, Comcast confirmed last week that it plans to discontinue its customer relationships with Clearwire. Comcast’s Infinity2Go service, which utilizes the Clearwire network, will be taken offline during the next six months. However, Comcast said it plans to retain its 9% equity stake in the WiMAX provider “for the foreseeable future.” On the heels of the spectrum deal and Comcast’s departure, Clearwire announced last week that it will seek $300 million in a new public equity offering. Sprint has said it will buy an undisclosed number of private voting shares of Clearwire. For its part, last week Verizon CEO Lowell McAdam stated at an industry event that the company will now discontinue its fixed LTE trials with DirecTV. However, in a statement given to FierceWireless, Verizon spokesman Jeffrey Nelson maintains that the conclusion of Verizon’s trials with DirecTV were not a result of Verizon’s partnership with the cable companies. Further, Nelson reports that Verizon continues to hold discussions with DirecTV on LTE, although the company has nothing new to report out of the trial.