On Monday, two of the nation’s largest cable companies are planning to announce a deal involving not cable, but rather communications. According to a report from the Wall Street Journal, Comcast and Charter Communications are forming a wireless partnership in which both companies will agree “not to make a material merger or acquisition in wireless without the other’s consent for one year.” That could signal that the media giants are looking to make their way into the mobile service providing space by purchasing a company like T-Mobile or Sprint. But under the terms of the new deal, neither company would be able to buy such a company without the other’s involvement or sign-off.
Companies in both the mobile service and cable industries have found themselves at something of a crossroads. The “big four” mobile service providers (AT&T, Verizon, T-Mobile, and Sprint) are fighting desperately for customers, driving down each others’ prices, whereas cable companies must reckon with the continued popularity of streaming services like Netflix and Hulu, which are contributing to the rise of the cord-cutting generation.
But perhaps in collusion there is salvation. As the Journal notes, “The cable companies view wireless phone service as an opportunity to create a new product to make their bundles more appealing and better retain existing customers.” Indeed, AT&T has already attempted such a bundled service, offering DirecTV to some of its customers.
Comcast and Charter, however, could be planning something even larger. As per the terms of the new partnership, the two firms would be able to “share technology and work together to use their combined scale in vendor negotiations,” according the Journal’s sources. The goal would be to establish some sort of a knowledge-sharing agreement, thereby achieving the most efficient business plan. The deal is also said to apply “only … with respect to other commercial arrangements with the national wireless carriers, such as in wireless airwave reseller deals like the one they already have with Verizon.”
Full details of the deal are expected to be announced later on Monday.
