Comcast, Charter in Wireless Pact -- WSJ
May 08 2017 - 03:02AM
Dow Jones News
Cable giants reach a partnership as they seek a share of
cutthroat business
By Dana Mattioli and Shalini Ramachandran
Comcast Corp. and Charter Communications Inc. are striking a
wireless partnership, people familiar with the matter said, as the
cable giants look to get a piece of the cutthroat business.
As part of the deal, Comcast and Charter have agreed not to make
a material merger or acquisition in wireless without the other's
consent for one year, one of the people said.
That agreement could stoke Wall Street speculation among
investors and analysts that the two largest U.S. cable companies
together could decide to make a play for a carrier like T-Mobile US
Inc. or Sprint Corp. Neither company as a single entity could buy
another wireless carrier for that time period as a result of that
agreement without the other's blessing or involvement, the person
said.
Wireless carriers are fighting it out in a fierce price war,
while cable companies like Comcast and Charter are dealing with a
saturated pay-TV business under assault from threats like
cord-cutting and cheaper online video services.
The cable companies view wireless phone service as an
opportunity to create a new product to make their bundles more
appealing and better retain existing customers. They hope that by
offering a "quad play" of cable TV, home internet, landline phone
and wireless service, customers will be less likely to drop their
service and jump to a rival.
Comcast recently released plans to offer a wireless service to
its customers and purchased airwaves that could be used to help
offer it in a government spectrum auction.
Charter has said it would offer wireless service as soon as next
year. Both plan to rely on a five-year-old agreement with Verizon
Communications Inc. that allows them to resell Verizon's airwaves
to offer cellphone service to their cable customers. Comcast plans
to start offering its mobile service to customers as soon as later
this month.
The new operational partnership will allow Charter and Comcast
to share technology and work together to use their combined scale
in vendor negotiations with the likes of Samsung for handsets, for
instance, one of the people said. However, the two companies will
keep their customer-facing wireless storefronts and mobile plans
separate.
The idea is that the partnership will allow the companies to
share what they learn about what works and what doesn't in service
plans and back-office billing operations, as well as achieve
potential cost efficiencies. It could also help the two advance
development on how to take advantage of their network of millions
of Wi-Fi hotspots to bolster their wireless service. Today, handing
off a voice call between a W-Fi hotspot and cellular remains
clunky.
The companies also agreed that they would only work together
with respect to other commercial arrangements with the national
wireless carriers, such as in wireless airwave reseller deals like
the one they already have with Verizon.
The cable companies will also likely explore working closer
together to gain scale in wireless and digital advertising as a
result of the partnership, another person familiar with the matter
said. Rivals AT&T and Verizon have openly discussed their
interest in making a bigger play there, as juggernauts Google Inc.
and Facebook Inc. are sucking up the majority of digital ad
dollars. Comcast and Charter already collaborate in local cable ad
sales.
Comcast and Charter will each still only offer wireless service
to customers within their respective cable footprints -- not
nationwide, the person said. However, their mobile plans' coverage
will be nationwide.
The deal is likely to be announced on Monday, people familiar
with the matter said.
Write to Dana Mattioli at dana.mattioli@wsj.com and Shalini
Ramachandran at shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
May 08, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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