Here’s How Comcast and Verizon Could Cut Netflix Off at the Knees
Comcast (NASDAQ:CMCSA) President and CEO Brian Roberts has been pushing for a controversial deal in which a joint venture between Comcast and two other cable-television firms would sell 122 Advanced Wireless Services spectrum licenses to Verizon Wireless (NYSE:VZ). Comcast would receive $2.3 billion from the sale.
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The deal has yet to be ruled on by the FCC, but it is expected to close by the end of the year. The partnership between Comcast and Verizon will certainly appeal to consumers because the companies would be able to offer free or low-priced smartphones as well as the convenience of a single provider for all a customer’s communication needs.
However, the deal is not popular among public interest groups, who have blasted the arrangement for giving more wireless spectrum to Verizon, already the nation’s biggest wireless carrier. The public interest groups have also argued that a component of the deal gives the cable companies and Verizon Wireless the unfair advantage of selling each other’s services.
A deal of this caliber would be a blow to companies like Netflix (NASDAQ:NFLX), Dish Network (NASDAQ:DISH), and DirecTV (NASDAQ:DTV). As content providers like Comcast and Time Warner (NYSE:TWX) lower their own prices, Netflix could be forced to drive its costs higher, and even the satellite companies could find themselves paying more for content. Verizon could also throttle network speeds for Netflix streaming videos to hurt the streaming company and lure back subscribers.
Investing Insights: Must-Know Morning News Cheat Sheet for Investors: May 3rd, 2012.