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Cable Has One Thing Verizon Needs

Mari Silbey
1/17/2017

Speculation has officially run rampant with a report out by the New York Post that Verizon is considering a purchase of one of the largest cable companies in the US. There are many reasons why the very idea is ridiculous, but that won't stop the rumor mill from churning, particularly after UBS analyst John Hodulik stated late last year that a Trump Administration could make it easier for such a large-scale merger to pass regulatory muster.

Combatting the logic of a major cable acquisition (e.g., Comcast or Charter) is the fact that the cost would be ginormous. Plus, Verizon Communications Inc. (NYSE: VZ) would gain a bunch of fixed-line broadband customers it never wanted, and technology integration would be a nightmare.

Also, can you imagine Brian Roberts selling to Verizon?

I'd chalk the whole thing up to fanciful thinking, except for one thing. Verizon desperately needs last-mile wireline support for its future as a 5G wireless provider.


5G networks are on the horizon. For all the latest news and insight, visit the 5G site
here on Light Reading.


Verizon is currently on a major fiber kick, but it can't compete with the installed last-mile infrastructure that the big cable companies already have in the ground. That means it's going to have to pay cablecos for capacity in local markets, and if it's going to fork over money anyway, maybe an acquisition looks like the smartest move. (See Analysts More Than Bullish on Comcast MVNO.)

I still say the idea of Verizon buying Comcast Corp. (Nasdaq: CMCSA, CMCSK) or Charter Communications Inc. ) is a long shot. But on the other hand, I didn't predict the MVNO agreement that Verizon made with the cable industry back in 2012. When it comes to telecom M&A, you just never know.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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KBode
KBode
1/18/2017 | 8:08:32 AM
Re: Not Really
I think if anything, they want NBC. But the cost of Comcast NBC Universal would be monumental. Something like an attempted CBS acquisition makes more sense given Verizon's attempt to pivot from fixed-line broadband toward wireless, marketing and media.
KBode
KBode
1/18/2017 | 8:07:29 AM
Re: Interesting...but
There's that, and then there's the fact that buying Comcast NBC Universal would simply saddle Verizon with a mammoth amount of debt. Also: Verizon has been trying desperately to pivot to media and advertising and get away from unwanted residential broadband markets. I don't see why they'd suddenly saddle themselves with tens of millions of additional residential broadband customers.

I think this is just stock jocks cashing in on their own rumor-induced share movement.
GregW333
GregW333
1/18/2017 | 7:34:04 AM
Interesting...but
I'm a bit rusty in my 1996 telecom act knowledge but I think there's a clause that says that no one company can have more than ~30% of US broadband homes.  Charter + TW was close to the max. 

It is an interesting thought exercise but as you noted I can't believe the Roberts family would sell Comcast to anyone.   They're constructing the tallest building in Philly is a statement of longevity.   Yet, given that the only real difference, tech and biz, is the last mile who knows.  The bigger issue that could cause regulatory angst would be the concentration of media assets.

Fun read...thanks

GW 
steve q
steve q
1/18/2017 | 12:13:41 AM
Re: Not Really
The only reason I see Verizon buying Comcast is due their ability to provide more Wi-Fi customer. If you have a Comcast account you can hoop onto anyone router to use there Wi-Fi hotspot for no extra charge, and if you are a Verizon FiOS customer you don't have that option and more customer must go to location that have free Wi-Fi and that is the biggest issue with Verizon. With the new project in Boston ma we need to make it must better for those customers by given them a Wi-Fi hotspot with FiOS and not just Verizon wireless and it hope for the 5g, and they have to move forward with a app that will provide their video service like that of Comcast is testing in the Boston area.
inkstainedwretch
inkstainedwretch
1/17/2017 | 7:38:36 PM
The bundle
The bundle remains a compelling marketing tool, and there is no reason why a wireless company and a cable company shouldn't merge. Yes, there are other wireless plays for cable companies, but there's a reason why the possiblity of Charter/Comcast/Cox buying T-Mobile is an intriguing notion. Comcast-Verizon sounds like a bunch of Wall Streeters praying for huge commissions, but such prayers have been answered before -- CEOs area bit more responsive than most gods. 

-- Brian Santo
CableGuru2015
CableGuru2015
1/17/2017 | 5:44:17 PM
Re: Not Really
5G is going to depend on microcell architectures to be effective, which is going to magnify exponentially the number of radio locations.  Cable's infrastructure is perfect for that because it not only provdes broadband backhaul, it also provides power (a much overlooked part of the equation).
ClientTe35162
ClientTe35162
1/17/2017 | 4:36:36 PM
Not Really
No doubt VZ needs fiber to the towers but outside of that, 5G is an RF thing - doesn't need any kind of physical cabling to cust prem. Noise about Verizon wanting a cable co....hoping that's noise from outside Verizon with no confusion inside.

       Who needs cabling to cust prem? Less technically aware companies that make huge investments in one-way communication facilities like satellite.

 
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