Speculation abounds as we now hear there are two companies interested in acquiring T-Mobile USA ($TMUS). Rumors are Dish Network ($DISH) and Comcast ($CMCSA) are talking with Deutsche Telekom ($XETRA:DTE). We are still very early in the process so there may be more companies interested. However let’s take a closer look at this from both the Dish and Comcast perspective.
Dish has a truckload of wireless spectrum they purchased, but they need a wireless connection to the customer to use it. Dish also has competitive pressure to deliver their signal wirelessly to keep up with the competition. So that’s why Dish both wants and needs a wireless addition to connect them to their customers.
Other large television providers already offer their TV signal both over a hardwire network and wirelessly. Comcast and Time Warner Cable ($TWC) currently connect with their customers through Verizon Wireless ($VZ).
If you recall, they do this as part of the deal where they sold their spectrum to Verizon Wireless a few years ago. That’s when they tried and failed on their own in the wireless space. In fact the entire cable television industry tried and failed at wireless. Newer competitors like AT&T ($T) Uverse and Verizon FiOS deliver their TV signal over the Internet, both wire line and wireless using their AT&T Mobility and Verizon Wireless networks.
Rumor has it that Verizon may want to sell their FiOS television business. This makes no sense since competition is getting hotter and they will need every avenue for growth. Verizon should take a lesson from the mistake Comcast, Time Warner Cable, Cox and others made in selling their spectrum. If Comcast does acquire Dish, I’m sure they would have loved to have the spectrum they sold to Verizon. But that’s water under the bridge. In fact, if Comcast does acquire T-Mobile, perhaps they won’t need to do business with Verizon Wireless any longer. If that’s the case this could be a big punch in the gut to Verizon.
Verizon Wireless is a much stronger, faster and larger network than T-Mobile, but Comcast has no control over them. And control as the wireless and broadband industry transforms itself, is a large piece of this puzzle. That’s one reason Comcast would be interested.
Regulators May Stand Between a Comcast and T-Mobile Union
Regulators could be another potential roadblock to a Comcast, T-Mobile deal. When regulators said no to the Comcast, Time Warner Cable deal they said pointed to dominance in broadband space. Regulators were less concerned with the cable television space and more concerned with broadband. They wanted to make sure too much dominance in the broadband space was not under one company.
Regulators want more companies delivering broadband and competing. So while Comcast and T-Mobile are in two different industries, cable TV and wireless, they are both broadband players using wire line and wireless technology. That may cause regulators to say no to a Comcast, T-Mobile deal.
Either way, both Dish and Comcast could use a wireless network as the industry continues its transformation. Perhaps down the road a Comcast deal would be approved when there are lots of other wireless and wire line broadband choices. However, I would say the regulatory hurdle is too high for Comcast and T-Mobile today.
Either way, expect to see continued consolidation and transformation in the larger space that includes both wireless and wire line broadband and television. As the industry continues it’s transformation over the next several years, we will see lot’s of different companies making lot’s of different moves. Some will be approved and others will not, but the debate will be extremely interesting to watch.
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