Cox Communications, a cable provider, has announced a deal to sell its 20 MHz Advanced Wireless Services spectrum licences to Verizon Wireless for $315 million. The sale comes just a month after Cox announced that it was discontinuing its wireless service, though it would continue to service its customers until March of next year. The deal covers only Cox’s 20 MHz licenses, and does not include the company’s 700 MHz licences, nor does it include any assets or information relating to Cox’s existing wireless customers. As part of the deal, Cox Communications and Verizon Wireless become agents for one another, allowing each to sell the other’s products and services.
Two weeks ago we brought you a news of Verizon’s deal to acquire the spectrum licences of SpectrumCo, a failed joint venture of Comcast, Time Warner, and Bright House Networks. In that deal Verizon gained 122 spectrum licenses for $3.6 billion. As part of that arrangement, Verizon, Comcast, Time Warner, and Bright House all became agents for one another. In Cox’s press release, they state that they anticipate being brought into this “innovation technology joint venture” as part of the current deal.
It remains unclear what Verizon intends to do with all of this spectrum they are acquiring. The SpectrumCo deal alone gained them enough to duplicate their extand 4G LTE network. Nor is it clear what the nature of this “innovation technology joint venture” is. Rumors that began surfacing after the SpectrumCo deal was announced may shed some light, however. Over the last two weeks reports have been popping up that suggest that Verizon was looking to break into the video web streaming market. The initial rumors, published just four days after the SpectrumCo announcement, suggested that Verizon was planning to start a service to compete with Netflix. So strong were the rumors, in fact, that they caused Netflix’s stock to dip. The next day, there came reports that Verizon had look at buying Hulu over the summer, when Hulu was looking for a buyer (they never found one). Finally, early this week there were rumors that Verizon was not looking to compete with Netflix at all, but rather to buy Netflix, a rumor that actually caused a jump in Netflix’s stock.
The juxtaposition may be telling: Verizon has made two deals in rapid succession that not only net them large chunks of wireless spectrum, but also make them the agents of four separate content providers, two of them big names in the industry. At the same time rumors run wild about the company starting its own web streaming service. Putting two and two together, it’s a fair bet that Verizon is acquiring the extra spectrum to make room for a massive upswing in traffic over its wireless network, the kind of upswing that would be caused by bringing a major media streaming service online.
This is all still just speculation at this point, however. Apart from the deals, Verizon has made no announcements regarding any plans for a streaming service (apart from the comments about Hulu). Moreover, both spectrum acquisitions have to pass muster with the federal government. That being the case, even if Verizon is planning a major web service to either compete with or incorporate Netflix, as seems likely, it will probably be quite some time before we see anything concrete.