Verizon and Comcast Deal

There seems to be two pieces of business common sense that are somehow mystifying to some people. First most business people would rather not do a deal than enter into a deal where they know they will lose money. Second - once a home has a high speed connection there is very little incentive for a competitor to pour the money into the infrastructure to put in a competitive connection. Its not brain surgery but some people just can't seem to get their arms around these two simple ideas. And as I explain below - these two simple ideas are the crux of the proposed Verizon Wireless and Comcast deal.




Verizon Wireless last year announced that it would buy the unused AWS (Advanced Wireless Services) licenses from Comcast and a few other major cable players. Verizon would then use those licenses to expand its LTE network. Win-win right? Verizon gets more bandwidth and the cable companies get to sell an asset they really were not going to use anyway.

Verizon Wireless and Verizon Fios are for most purposes separate companies. Verizon Fios has already drawn a line in the sand regarding where and how big their fiber based Fios footprint will be. It is clear that people who have Fios love it. In areas where Verizon just has a copper line to the house - if there is cable company offering broadband then that house will soon be getting all of its services including landline phone from the cable company. Areas that don't have Fios or cable broadband don't have these services for a reason. These areas need smaller companies that are more nimble or have lower overhead costs to operate at a profit. Or they need the municipality to step up to offer FTTH. Verizon and the big cable companies aren't going to start offering services in areas where the business case says they will lose money. Again - not brain surgery.

Sure there are some legitimate concerns and details that need to be worked out on the deal but overall it is a good thing. People who think it will lessen competition between Fios and the cable companies just don't understand the business. The CWA is against the deal because they think stopping the deal would slow the deterioration of the Verizon copper based business which is the bread and butter for the CWA workers. Copper based landlines and DSL in a few years will be as widespread as ISDN and rotary dial.

If people like Boston Mayor Thomas Menino think that if they block the deal then Fios will magically decide to deploy in Boston to compete with Comcast then they are either naive or something worse. Verizon Fios is not in Boston because Thomas Menino made it impossible for Verizon to do business in the city at a profit. He made too many demands and basically made Verizo build around but not in the city.

The deal should go forward but don't be surprised if Attorney General Eric Holder holds up the deal. In public he will say it is because of competition concerns but in reality it will be to try and make the CWA happy.

Its not brain surgery to understand what's going on here.