Charter Communications Inc and Comcast Corp have struck a partnership arrangement that will see them provide wireless services to customers. The deal between the two includes a clause which forbids either of the two companies from entering into a merger or pursuing an acquisition in the wireless sector without the consent of the other for a period of one year. The clause has led to speculation among analysts and investors in Wall Street that the two cable companies could potentially decide to acquire a wireless carrier such as Sprint Corp or T-Mobile US Inc.
In the mobile telecommunications industry, wireless carriers are engaged in price wars while in the cable sector, Charter and Comcast are having to deal with a pay-television business that is saturated and also threatened by online streaming.
Quad play offering
With the wireless phone services, the cable firms eye an opportunity that allows them to develop new products that would increase the appeal of their bundles as they seek ways of retaining existing customers and halting the growing wave of cord-cutting. In the view of the cable firms, a quad play offering of wireless service, landline phone, home internet and cable television would make it less likely for customers to cancel their subscriptions.
Recently, Comcast disclosed that it was planning to provide a wireless service for its customers and this could start later this month. To achieve that the cable firm acquired airwaves at a spectrum auction. Charter, on the other hand, has also indicated that it could start offering a wireless service as early as 2018. The two companies will, however, have to depend on an agreement they both have with Verizon Communications which lets them resell airwaves belonging to the largest wireless carrier in the United States to their customers.
Additionally, the partnership between the two firms will see them sharing technology. They will also combine forces when negotiating with vendors for handsets and the like. Mobile plans and stores of the two companies will however be kept separate.
The two companies will also explore opportunities that lie in digital and wireless advertising. This will be in line with a trend set by Verizon and AT&T, both of whom are making forays in online advertising as they seek to grab a share of the market that is dominated by Facebook and Google. In this regard Verizon has acquired internet companies such as AOL and most recently Yahoo.