Verizon Will Make Its Own Rules
Verizon Wireless (NYSE:VZ) hasn’t yet received government approval for its spectrum purchase from a group of cable companies, but the carrier is not waiting on it to begin content partnerships with them. The wireless carrier and Comcast (NASDAQ:CMCSA) will start reselling each other’s mobile and cable services in several major markets.
Verizon is still waiting on a Department of Justice and Federal Communications Commission approval on a spectrum purchase worth $3.6 billion from SpectrumCo, a joint venture of Comcast, Time Warner, and Bright House Networks. Critics say such agreements reduce the likelihood of competition between telecommunications and cable providers.
However, through this latest cross-selling partnership, users can buy Verizon’s wireless service at Comcast stores and ask for Comcast service at Verizon stores. The companies are also offering rebates as well as bundled plans that offer higher data allotment. The tie-up is in six different markets: the Denver metro area; Atlanta; Chicago; Kansas City, Missouri, Minneapolis-St. Paul, Minnesota; and Salt Lake City.
However, areas where Verizon’s FiOS fiber-to-the-home service is offered are excluded, which may lead to brand confusion among consumers, according to analyst Jeff Kagan. “At best, this Verizon Wireless deal with Comcast will cause great confusion in the marketplace with brand recognition,” Kagan wrote. “Verizon Wireless will become a direct competitor to Verizon and that will just confuse the heck out of the marketplace that thought these two companies were the same.” According to Kagan, “there is also the potential to seriously injure the value of the Verizon, Verizon Wireless and Comcast brand.”
The FCC may be more interested in how it violates free-competition regulations. Verizon and the cable companies insist this arrangement is separate from the spectrum transaction.