The recently announced deal between Verizon Wireless and the cable MSO trio of Comcast, Time Warner Cable, and Brighthouse is creating significant buzz within the industry. And why not. Who could have predicted these telecompetitors would get in bed together?

SpectrumCo, the consortium of these cable companies that controls the AWS spectrum, selling the spectrum to Verizon Wireless – sure. But to include talk of resale and co-marketing deals, and a joint venture to study how to do even more technology innovation and integration between the two – in a word, wow. It’s pretty illustrative of how dynamic the industry has become, where competitors now look to each other as partners.

There is much to digest with this deal and the implications are far reaching. One issue I would like to focus on is the potential impact on DSL broadband. Assuming this deal passes regulatory muster, which is not a given, the impact on the DSL ecosystem could be far reaching.

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My premise with this argument is that Verizon Wireless’ parent company Verizon has pretty much abandoned DSL with this deal. You might make the argument that Verizon buried DSL even before this deal, but this may be the nail in the coffin.

Reason being, if you read into the co-marketing, resale, and technology integration terms of the cable – Verizon Wireless hook-up, you could surmise that Verizon intends to package mobile broadband services with cable’s wireline broadband and video services as a bundle. Now I would assume they don’t intend to market that bundle in Verizon FiOS territory (but maybe that’s not even safe). But in territory where Verizon only markets DSL services, you could easily conclude, it will be open season and Verizon can pretty much wash their hands of DSL in those markets, favoring the new cable-mobile broadband bundle. You think Verizon DSL net additions (more like net losses) are bad now. Just wait.

But it doesn’t end there. The Verizon-Cable duo can now go head up with other DSL offers from AT&T, CenturyLink, Frontier, FairPoint, on and on. Cable broadband is already crushing DSL offers in many metro/urban markets. Adding a Verizon Wireless mobile broadband component to their bundle will only help, especially if the announced “technology joint venture” develops tightly integrated services between cable broadband and video, and Verizon’s 4G LTE platform. One can only imagine the possibilities.

My guess is Verizon Wireless probably has 50+ million customers (give or take 10 million or so) who are not already cable or FiOS customers to market this new integrated bundle to, not to mention their retail footprint. It may be a full on assault on DSL powered broadband, and history suggests, it won’t fare well.

Could this have a material impact on the DSL ecosystem? Maybe. Certainly not in the short term. But across the board declining DSL port numbers means less and less attention from vendors in terms of R&D and support. Something to ponder regarding the long term future of DSL.

 

Image courtesy of flickr user Anosmia.

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9 thoughts on “Does Spectrum Deal Put DSL in Peril?

  1. It's a little bit of a stretch, but I guess I see where you are going. Not sure DSL had a long term future even before this deal.

  2. Will be particularly interesting to see how this partnership goes after all those markets they just sold off to Frontier and FairPoint. In the words of the great philosopher Mr. T, "I pity the fool!"

  3. At least DSL has a decent rural penetration but nobody cares about that. It's all about high dollars in high density population centers and the Goliaths like Verizon and Comcast who use those dollars to crush competition.

    1. Agree – DSL competitive dynamics are not the same in rural markets, where DSL is strong. Point with the post is that ALL DSL providers may be impacted by this, should it have a negative effect on the macro DSL picture. Tier 3s need Tier 1s to drive volume and keep an ecosystem vibrant. If tier 1s trail off, ecosystem takes a hit, which impacts all.

      1. Likely, but DSL can be offered for significantly less than Cable, and faster, especially in populated areas nearer the Central Office. Unfortunately, Telcos do a horrible job developing, marketing, and lobbying for their valuable land line resources. Most of their time and investment is fending off archaic public utilities regulation.

        If Cable companies were required to run one free TV ad for DSL for every free Cable Modem ad, you'd see an explosion of DSL subscribers.

        1. Spot on – if the telcos spent half the time and energy on product development and marketing that they do on maintaining status quo regulatory regimes, they would be the better for it.

  4. More interesting question is will VZW open this up to other cable MSOs? If they get Charter and a few of the smaller guys like Suddenlink on board, it really begins to look interesting. Quite a coup for VZW.

  5. The opportunity is in programming. Verizon and one or more MSOs co-negotiating programming will greatly improve their leverage. Maybe TWC will finally get NFL Network. Or maybe they can all open up NFL Sunday Ticket away from DirectTV.

  6. It's amazing that the FCC will shoot down the AT&T and T-Mobile merger, but let these otherwise monopolistic (franchise protected), companies capitalize on spectrum that was originally intended to spur competition, then use their proceeds of sale to diminish it. Since the spectrum was never used – they locked it up for nearly five years – competition was never truly their intent. Indeed, the spectrum should be auctioned-off to small operators like the original cellular developers. The Cable companies should be entitled to get their original investment back, less a penalty for sitting on this valuable resource any diminishing the opportunities others could have made. Verizon is being a shrewd buyer, but the Cable companies are getting away with unfair speculation by not living-up to their obligations for developing the spectrum.

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