In another spectrum deal that is sure to turn heads in the cable and wireless industries, Verizon Wireless has agreed to buy wireless spectrum from Cox Communications for $315 million.
The deal with Cox follows a bigger one Verizon struck earlier this month with SpectrumCo owners Comcast, Time Warner Cable, and Bright House Networks, which added spectrum worth $3.6 billion.
For Verizon Wireless, the leading wireless services provider, the Cox deal is like icing on the cake. Verizon's agreement with Cox is structured much the same way as the SpectrumCo pact. Cox and Verizon will sell each other's products and services. Cox also has the option to sell Verizon Wireless' services on a wholesale basis. In the future, Cox will be folded into the joint venture formed by Verizon Wireless, Comcast, Time Warner Cable, and Bright House to integrate wireline and wireless products and services.
Cox had made forays into the wireless business but gave up on competing with the bigger wireless companies earlier this year. The agreement with Verizon solves the cable company's problem about how to leverage a valuable asset that is becoming increasingly scarce as consumer demand for wireless services increases.
"These agreements provide Cox customers with key enablers to mobility, such as access to Verizon Wireless' 4G LTE network and iconic wireless devices," said Pat Esser, the president of Cox Communications, in a statement.
The deals are subject to review by the Federal Communications Commission and Department of Justice.
Public interest groups, having successfully fought hard against the AT&T and T-Mobile merger, are just as alarmed, if not more at the Verizon deals because it takes cable companies out of the wireless business. "From here on out, cable won't do wireless, and Verizon won't do video. This new cartel means higher prices and less competition. The cease-fire is more important to consumers than the proposed AT&T/T-Mobile transaction because it is much more likely to happen," said Andrew Schwartzman, the policy director of the Media Access Project.