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Verizon and Comcast: Strange Bedfellows?

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Today marks the coming to life of the first spawn of the co-marketing agreements made between Verizon (NYSE: VZ  ) and a consortium of cable companies last month. Comcast (Nasdaq: CMCSA  ) , Time Warner Cable (NYSE: TWC  ) , and Bright House Networks sold a cache of spectrum licenses to Verizon for $3.6 billion and the rights to resell the carrier's wireless services.

This first joint venture has Comcast and Verizon offering consumers in Seattle and Portland, Ore., a bundle of services, which include wireless and wireline phone services, cable TV, and Internet.

This cooperation between the two companies may seem more than a little incongruous, given the no-holds-barred xfinity/FiOS competition they have engaged in, but the opportunities for both can't be ignored. There are close to 700 Verizon stores in Comcast's 50 million home cable TV coverage area, giving Comcast huge cross-promotional opportunities. And the 122 Advanced Wireless Spectrum licenses covering a population of 259 million that Verizon has received give it an even greater spectrum edge over AT&T (NYSE: T  ) .

A clear loser as a result of this deal has been Clearwire (Nasdaq: CLWR  ) . Once Comcast and Time Warner Cable agreed to join up with Verizon, they announced plans to stop selling Clearwire's wireless services in six months. This contrasts with Comcast cable president Neil Smit's statement last month that his company could resell Verizon Wireless services into "perpetuity."

The companies plan to bring their partnership to more markets over the next year and into 2013. They also plan on cooperating in developing content streaming products, which will work either wirelessly, over cable TV, or on the Internet, as reported by The Philadelphia Inquirer.

The line separating cable companies, wireline telecoms, and mobile carriers has become less defined. Besides now getting into the wireless business -- as have regional telecoms Frontier Communications and CenturyLink by signing reselling deals with AT&T and Verizon, respectively -- many cable companies have gotten tired of watching their cable TV subscribers become video streamers, so they have been turning themselves more and more into Internet service providers.

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Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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10/21/2016 4:00 PM
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