Verizon's Latest Spectrum Grab: $315M for Cox AWS
Verizon Wireless continued its spectrum buying spree on Friday with its $315 million purchase of Cox Communication's AWS spectrum.
The announcement comes just two weeks after Verizon announced it had inked a $3.6 billion deal to buy 122 AWS licenses owned by Comcast, Time Warner Cable and Bright House Networks.
The Cox licenses acquired by Verizon today cover 28 million people. The companies did not say how many of the 20 MHz licenses were included in the sale, but a search of the FCC's spectrum database showed Cox owns 31 AWS licenses in markets including Boston, Atlanta, New Orleans and Las Vegas.
The acquisitions of the cable-owned AWS spectrum give Verizon an advantage over rival AT&T, whose attempt to gain additional spectrum through its $39 billion acquisition of T-Mobile USA appears to be foundering amid opposition from the FCC and Justice Department.
"AT&T would have loved to sink their teeth into some of the spectrum that Verizon just got," analyst Jeff Kagan wrote in a research note, calling the Cox deal a "grand slam home run." "It looks like Verizon is rolling in spectrum now and should not face the problems AT&T faces."
The deals with Cox and the other cable companies still have to be vetted by the Justice Department and FCC, which could require Verizon to divest some of the licenses.
Verizon plans to use the spectrum to add capacity to its LTE network, which runs on its national 700 MHz footprint.
Verizon's new AWS spectrum was originally purchased by a group of cable companies during the FCC's 2006 spectrum auction.
Comcast, Time Warner Cable, Bright House Networks and Cox Communications came together under the name SpectrumCo to buy up AWS licenses during the auction. The consortium placed winning bids for 137 licenses, for which they paid a total of $2.37 billion.
Cox Communications eventually split from the group to pursue its own wireless ambitions, but ended up ditching plans to build its own network in favor of an MVNO deal with Sprint. That effort also fizzled, and last month Cox said it would discontinue its wireless service in the spring.
Cox will net a tidy profit of about $66.7 million from the sale of its spectrum holdings to Verizon - it shelled out $248.3 million for its share of the licenses originally obtained through the SpectrumCo team-up. Cox is holding on to its 700 MHz spectrum and current customer accounts for its soon-to-be-defunct wireless services.
The rest of the operators never used the spectrum to build a network and in 2008 pursued their wireless ambitions through an investment in Clearwire. That tie-up failed to be fruitful, however. A spokesman said Time Warner Cable has just 27,000 mobile internet customers using Clearwire and Sprint's service. Comcast only resells Clearwire's service in some markets and has not disclosed how many WiMAX customers it has.
Comcast, Time Warner Cable and Bright House network currently offer wireless services through Sprint. Their agreement with Verizon turns exclusive in six months, a representative said, after which they'll stop selling Sprint's service.
Cox has a similar deal with Verizon. The cable company "may" have the option to sell Verizon Wireless services on a wholesale basis. The companies did not say when the arrangement would begin, only saying it would be determined "over time." Cox plans to participate in a joint venture formed by Verizon Wireless, Comcast, Time Warner Cable and Bright House Networks which aims to better integrate wireline and wireless products and services.