Verizon to buy Cox spectrum to remake its broadband model

Verizon wants to ensure you can hear people in ten years.

Verizon Wireless has agreed to purchase some of Cox Communications wireless spectrumin a deal valued at $315 million. And once again, Verizon shows AT&T exactly how its done, when it comes to getting more airwaves without setting off a huge government production. Verizon will not only buy the airwaves, but it is also signing an agreement to resell Coxs services and possibly to let Cox resell Verizons service under its own brand name.

With this deal, and the large spectrum buy announced earlier this month, Verizon looks like its ready to focus on its wireless business and let its residential wireline business stagnate. Given its reorganization of its enterprise business this week, my bet is its wireline investments in fiber will be deployed to benefit its wireless towers and its enterprise datacenters providing cloud services.

Verizon, which agreed earlier this month to spend $3.6 billion buying 20-megahertz blocks of spectrum that belonged to a consortium of cable companies (Time Warner Cable, Comcast and Bright House Networks), will buy 20 MHz of Advanced Wireless Services (AWS) spectrum licenses covering 28 million people from pay TV provider Cox. This spectrum is the same type that Verizon acquired earlier this month, and the resale and other agreements that let Verizon and Cox resell each others products look si! milar.

The competitive implications of this could be profound, as Verizon locks up more airwaves and secures its No. 1 position in the wireless market, while appearing to cede the wireline market to the cable guys. Does this mean Verizon is done deploying FiOS? It certainly means the cable guys arent going to compete in the wireless market anytime soon.

This is also the same spectrum that AT&T was hoping to use for its LTE deployment if its purchase of T-Mobile went through. Cox also has some 700 MHz spectrum licenses, which Verizon is not buying.

Cox had planned to use its airwaves to build out a wireless network, but realized how challenging such an endeavor would be, and in November pulled the plug on any form of quadruple play that would include the web, voice, video and wireless. When the Cox wireless networks demise was rumored, I wondered who would buy Coxs airwaves thinking perhaps it could partner with Sprint. But now it looks like Verizon has locked up not just enough spectrum for one LTE network in its 700 MHz band, but has now spent roughly $4 billion buying enough to deploy an entirely separate network in the AWS band.

If the FCC approves this deal, Verizon has just spent far less than AT&T proposed to do and took out a potential competitor that could have grown even stronger than T-Mobile USA. The cable companies decision to decamp from the wireless market, despite owning their airwaves also shows how hard building a network can be. If the cable guys dont have the heart, its hard to see LightSquared or even Dish succeeding without some serious support from the few nation! wide car riers still left on the field.

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