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Comcast And Charter Forge Wireless Alliance That Could Preclude Verizon Deal

Deadline logo Deadline 5/8/2017 David Lieberman
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You can probably forget about a Verizon deal to buy Charter Communications for at least a year as a result of a wireless services agreement the cable company forged with Comcast, to be formally announced on Monday.

The No. 1 and 2 cable providers will share information about wireless phone services each plans to introduce within their markets, and negotiate together with phone, equipment, and service providers, a person close to the situation says.

In addition, the companies agreed to not make a major transaction with a wireless company without the other’s approval for a year.

Verizon already has deals with the largest cable operators to provide cell phone connections to largely wifi based wireless services they can introduce.

Last month Comcast unveiled its plan use that agreemet to help launch Xfinity Mobile by the end of June. It will cost from $45 to $65 a month, and work with popular devices including iPhones and Samsung Galaxy phones.

Charter CEO Tom Rutledge says his company will have a similar service in 2018.

Both companies say that they would benefit by adding wireless to their current triple play offerings with video, internet, and wired phone.

The new Comcast-Charter agreement will give Rutledge more time to focus on integrating Time Warner Cable, which his company bought last year.

Comcast and Charter’s wireless services also could learn lessons from each other’s experiences, and benefit from economies of scale. For example, Comcast has vowed that its service will automatically connect with wifi signals without requiring users to constantly log in.

Verizon CEO Lowell McAdam kicked off speculation about a possible Charter deal in December when he said that it would make “industrial sense.”

The wireless power faces intensifying competition from AT&T, which bought DirecTV in 2015 and is looking for federal approval of its $85 billion acquisition of Time Warner.

In addition, a wired network could help AT&T’s effort to deploy speedy 5G wireless services. For example, a cable system could efficiently handle much of the data traffic before transmissions hit the wireless network.

Investors believe the environment is ripe for a major wireless deal. They expect the Trump administration to look favorably on big mergers. In addition to Verizon’s rivalry with AT&T, T-Mobile is eager to grow — and bought a lot of spectrum in a recent FCC auction.

And prospects are uncertain for Sprint and Dish Network, which also are rich with rights to airwave spectrum.

The Wall Street Journal first reported the Comcast-Charter alliance.

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