Of the spectrum of possible regulatory remedies that could emerge from the proposed T-Mobile/Sprint merger, one of them reportedly involves actual spectrum.
T-Mobile and Sprint are considering the divestiture of some of their combined spectrum to appease the US Department of Justice, and Comcast and Charter Communications are among the parties interested in buying any that might become available, Bloomberg reported Thursday.
Such a divestiture could pave the path toward a T-Mobile/Sprint merger while also establishing a new fourth competitor alongside New T-Mobile, AT&T and Verizon, Bloomberg said.
Charter declined to comment on Bloomberg's story.
Comcast shot the story right in the foot. "We do not have an interest in acquiring divested spectrum from the Sprint T-Mobile transaction," a spokesperson for Comcast said in an email to Light Reading.
Looking beyond the MVNO
Today, Comcast and Charter market mobile services that are underpinned by MVNO deals with Verizon Wireless, and complemented by the cable operators' in-home and metro WiFi networks. Rather than competing with the mobile incumbents head-on nationally, both have focused their mobile efforts within their respective cable footprints and offer mobile bundles that help them acquire and retain high-margin home broadband subscribers.
Using that strategy alongside simple unlimited and by-the-Gig service plans, Comcast and Charter have combined to add some 1.7 million mobile lines through Q1 2019 -- 1.4 million lines for Xfinity Mobile (Comcast) and 310,000 lines for Spectrum Mobile (Charter).
While it seems unlikely that Comcast and Charter will look at the joint acquisition of any spectrum that might become available from T-Mobile/Sprint, the two MSOs have established a joint venture for mobile services that aims to lower costs and add operational scale to the combined effort.
Analysts have been concerned about the economics of their current MVNO deals with Verizon, arguing that they'll need to revise those agreements or look for opportunities to obtain spectrum.
MoffettNathanson's Craig Moffett said in April that Comcast and Charter will have a hard time turning a profit with mobile unless they can carve out new, more favorable MVNO deals.
Before the possibility of buying spectrum from T-Mobile and/or Sprint entered play, both Comcast and Charter have been testing wireless services in the 3.5GHz CBRS band, though neither has announced plans to bid for spectrum in the licensed portion of the shared CBRS band.
"We have always thought the Verizon MVNO was useful for market entry, but that cable would look to deploy its own spectrum to improve its wireless economics over time," New Street Research analysts wrote in a research note weighing the implications of the Bloomberg report. "We had expected this deployment to begin in 2020 with CBRS and the potential for additional C-Band spectrum to be layered on in ~2023."
- Charter Tests Massive Private LTE Network in 3.5GHz CBRS Spectrum
- DoJ 'Leans Against' T-Mobile/Sprint Merger – Report
- FCC Commissioners Waver Over C-Band Details for 5G
- Sprint/T-Mobile Merger Gets FCC Chairman's Approval, Albeit With Conditions
- Altice USA's Mobile Service to Fetch $20-$30 Per Month – Report
- Legere: T-Mobile Not Feeling 'Major Pressure' From New Cable Rivals
- Comcast, Charter MVNO Deals Are Bad for Everyone – Analyst
- C Spire Suddenly Endorses Sprint/T-Mobile Deal, but Altice Still Opposes It
— Jeff Baumgartner, Senior Editor, Light Reading