Comcast, Charter Join Forces In Wireless, Agree Not To Compete

from the now-witness-the-power-of-this-fully-operational-battle-station dept

For several years now, cable giants Comcast and Charter have had their eye on jumping into the wireless business. Both companies gobbled up a large amount of spectrum at the FCC's 2008 700 MHz auction, but a few years later got cold feet after realizing that going solo in wireless would not only be incredibly expensive, but would require something called competition (gross). So in 2011, they struck a deal with Verizon Wireless, which bought the cable sector's spectrum for $3.6 billion, in exchange for a cozy cross-promotional relationship. As an unspoken part of that relationship, Verizon Wireless has been happily driving its unwanted DSL customers to cable, where they're often then sold Verizon Wireless service.

That 2011 deal also featured language allowing the cable providers to launch their own MVNO (mobile virtual network operator) that leans heavily on WiFi, but uses the Verizon network for cellular backup. So over the last few years, Charter and Comcast have been cooking up new WiFi-centric wireless services they plan to only bundle with traditional cable and broadband inside their own footprints (again, to avoid having to more seriously compete with national established carriers like their friends at Verizon).

Neither service has launched yet, but this week Comcast and Charter struck a new cooperative deal that will let them use their combined leverage to secure better handset rates. A Comcast announcement states that the agreement will provide both companies with "operational efficiencies" down the road:

"The efficiencies created are expected to provide more choice, innovative products and competitive prices for customers in each of their respective footprints. Additionally, the companies have agreed to work only together with respect to national mobile network operators, through potential commercial arrangements, including MVNOs and other material transactions in the wireless industry, for a period of one year.

But the deal, outlined in more detail in this SEC filing, also has a few other interesting conditions -- including one preventing either company from making a major wireless acquisition without involving the other. Some of these provisions immediately set off alarm bells among some consumer advocates, who worry that the agreement will also ensure that the two companies don't compete with each other as they push into wireless:

"One of the basic ideas of antitrust law is that when companies that compete with each other, or could compete with each other, make an explicit agreement to not compete with each other, that violates the antitrust laws," Feld told Ars today. "Agreeing to coordinate with each other to avoid competition is expressly a violation of the antitrust laws." But that doesn't mean Comcast and Charter won't be able to follow through with their plan. It's impossible to say with absolute certainty whether any specific agreement violates antitrust law, and "both Comcast and Charter have very good lawyers," Feld said.

Right now, some of these worries seem premature. For one, Comcast and Charter always intended to offer their respective, traditional wireless services siloed within their own broadband footprints, not nationwide. Most telecom analysts also feel that Comcast's effort seems a little half-baked, with the company weirdly going out of its way on a recent conference call to downplay expectations for the service. And the cable industry is filled with these kinds of cross-collaborative efforts that quite often tend to go nowhere fast. There's a very strong chance that these companies' wireless services, for lack of a more technical term, suck.

That said, there is a framework here for some anti-competitive shenanigans. With Trump being bullish on M&As to prop up job claims (real or not), rumors have emerged that Comcast or Charter could acquire Verizon. If an expected Sprint bid to acquire T-Mobile also takes place, you could be looking at a dramatic fixed and wireless telecom consolidation wave that would reduce the already tepid desire to compete substantially. And with a Trump FTC and FCC that believe duopolist oversight and consolidation restrictions are quaint, nobody's going to be looking out for the potential anticompetitive impact of these deals.

Combine that with the death of privacy and net neutrality consumer protections, and the cable industry's growing monopoly over fixed broadband, and we really could be looking at an anticompetitive firestorm of bad ideas across both fixed and wireless networks. Under that scenario, Comcast and Charter's new arrangement would be the least of our collective worries.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community. Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis. While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: competition, fcc

Companies: charter, comcast