Cable firms join forces to offer cellphone plans
Comcast Corp. and Charter Communications Inc. have agreed to cooperate on upcoming cellphone services as both cable companies face growing threats from national wireless carriers such as AT&T and Verizon.
The cable companies said that although they’ll offer wireless services separately to customers, they will work together on behindthe-scenes matters such as customer billing and device-ordering systems. They said the agreement will save money and help them compete with national providers.
As part of the deal, announced Monday, Comcast and Charter agreed that they wouldn’t buy other wireless companies for one year, and that they wouldn’t make related deals without consulting each other first.
The partnership also includes restrictions on any transaction that would give another company a majority ownership or voting power in either Comcast or Charter.
The agreement comes amid speculation of impending consolidation in the wireless industry and has the effect of letting both companies develop wireless services to compete with existing wireless carriers without having to worry about also competing with each other.
For the most part, Comcast and Charter aren’t direct competitors because their service territories don’t overlap. The bigger threat comes from the likes of Verizon and AT&T, which are able to offer TV, Internet and home phone services along with wireless.
Comcast, based in Philadelphia, expects to launch its own wireless plan, Xfinity Mobile, in the next several weeks. Charter, based in Stamford, Conn., expects to introduce its unnamed service next year. Both wireless services will lease Verizon’s network.
To reduce costs, Comcast and Charter will need to encourage customers to use Wi-Fi hot spots rather than cellular whenever possible. By working together, the two companies can explore ways to let customers use either company’s hot spots when traveling.
Analysts at Moffett-Nathanson said in a research note that the Verizon lease lets each company market wireless service only in its cable service territory.
But if either Comcast or Charter were to buy a wireless carrier such as T-Mobile or Sprint, it suddenly would be able to sell service nationwide, including in the other cable company’s region.
The deal won’t prohibit the companies from making a joint bid for a wireless carrier.
“Neither company wants a future where they are adjacent in wireline but overlapping and competing in wireless,” the Moffett-Nathanson research note said. “Either company acquiring TMobile or Sprint would have been an untenable situation.”
Comcast shares rose 0.5% to close Monday at $39.20. Charter dropped 3.3% to $323.81.