MSO Deal Not Verizon's Spectrum 'End Game'

Verizon Wireless is in line to buy a valuable batch of Advanced Wireless Services (AWS) spectrum from Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC) and Bright House Networks , but the carrier still sees an exhaustion point on the relatively near-term horizon. (See Verizon Wireless: Cable’s New BFF and MSOs Sell AWS Spectrum to Verizon for $3.6B .)

While that AWS spectrum fits "hand-in-glove" with Verizon's 700MHz holdings, it gives the service provider capacity runway in the "four- or five-year kind of range, maybe more," Verizon Communications Inc. (NYSE: VZ) President and CEO Lowell McAdam said Wednesday at a UBS AG investors' conference in New York.

"There is an awful lot of work on compression techniques, but it's not sort of the end game for us," he added, noting that much will depend on the adoption of Long Term Evolution (LTE) and how video-intensive the applications are.

He noted that the "foundation" of Verizon's LTE deployment is its 700MHz spectrum, but it's to be complemented by its existing AWS holdings on the East Coast and the SpectrumCo (Comcast, TW Cable and Bright House) spectrum that starts in the Mississippi region and matches up with Verizon in the western part of the U.S. "So it really was a hand-in-glove opportunity for us to be able to add capacity to LTE where we need it though the AWS holdings," McAdam said.

As future spectrum opportunities go, McAdam says Verizon will be keeping an eye on potential incentive auctions for the D Block and the possible repositioning of old broadcast TV spectrum.

"I think the FCC really needs to facilitate getting the spectrum that is out in the inventory in the right hands," he said, noting that there's an "awful lot of venture capital companies and smaller carriers that have the spectrum and they really can't afford to build it out."

McAdam also outlined a few service integration ideas Verizon Wireless and its new cable partners have in mind with respect to the technology joint venture. Among them: videoconferencing that works across TV sets, PCs and tablets and the notion of syncing up access to video content between smartphones and set-top boxes.

He said some of those "relatively simplistic products" could start to appear by the second half of 2012. The co-marketing/promotion end of the deal will roll out in four markets in January, he said.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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