Comcast Corp. (NASDAQ:CMCSA) and Charter Communications are forming a joint venture to collaborate on the development of technical infrastructure for wireless operations. Under the joint venture, the companies have agreed to work together only with respect to national mobile network operators and “other material transactions” in the wireless industry, for a 12-month period. The cable giants announced the pact Monday.
Comcast and Charter said the deal will provide “more choice, innovative products and competitive prices” for consumers. Charter’s chairman and CEO, Tom Rutledge, said, “By working with the team at Comcast, we can not only speed Charter’s entry into the marketplace, it will also enable us to provide more competition and drive costs down for consumers at a similar national scale as current wireless operators.”
The companies’ agreement covers several potential operational areas in wireless. The operators have also agreed that they will not discuss transactions worth more than $50 million with any national mobile wireless carrier that would result in an acquisition of at least 50 percent of the voting power or consolidated assets of the carrier. In addition, they won’t separately engage in any material wireless transactions with a value of more than $200 million that involve the direct or indirect purchase of wireless spectrum that constitutes at least a majority of the transaction value.
The deal will allow the companies to work together to compete with other giants on providing wireless services. The wireless space is already crowded with AT&T, Sprint, T-Mobile, and their mutual partner Verizon competing for share. Verizon and AT&T are the largest wireless providers in the US by number of customers.
Both Comcast and Charter already have separate deals with Verizon Wireless. Today, the two companies buy data allotments in bulk from Verizon and resell them as wireless plans under their own brands. They are now developing their own wireless technology to sell directly to their customers.
Comcast plans to launch Xfinity Mobile, a service powered by Verizon Wireless, in the next few weeks. Xfinity Mobile will be available as an addition to Comcast’s other Xfinity services. When a customer adds Xfinity Mobile to their Xfinity Internet service, they can add up to five phone lines automatically for no extra cost.
Comcast and Charter are the two biggest cable operators in the US. In the future, if the cable companies agree to deals with other wireless providers, they’ll have to do so jointly. They hope their combined size will help them to negotiate better contracts.