In a move that initially will strike many observers as unusual, Comcast and Verizon Wireless are selling each other’s services in Seattle and Portland, Ore., promoting their respective services to the other’s customers. The program seems aimed at prospects who are not already Comcast or Verizon Wireless customers.
There’s an obvious logic to that tactic. Comcast competes against CenturyLink and satellite video providers in those two cities. Verizon competes against AT&T, Sprint and other wireless providers, but has no fixed network operations in Seattle and Portland.
Comcast gets the equivalent of a strong quadruple play bundle, adding wireless services, which will help it battle the satellite video providers. Verizon gains a terrestrial broadband and fixed network video capability, which differentiates it from AT&T and Sprint in those areas.
Whether the program, also to be offered by Time Warner Cable, Cox Communications and Bright House Networks, raises regulatory issues remains to be seen.
Some have worried that the deal will lessen competition, as it could, in some scenarios, lead to less investment by both an incumbent telco and an incumbent cable operator. The way the program seems to be conceived in Seattle and Portland does not raise those issues.
CenturyLink, not Verizon, is the incumbent telco. And Verizon has no intention of building a fixed line network in those areas. So the cross promotion helps both Comcast and Verizon Wireless compete against other key competitors, without directly affecting any investment decisions either Comcast or CenturyLink might be willing to undertake in the region.
Nor is it likely that Verizon and the cable executives are unmindful of regulatory oversight issues. But it might be so easy to avoid such scrutiny entirely.
There are some markets, such as New York, where Verizon and Time Warner Cable do compete, head to head in fixed line services. The issue in such areas is that Verizon already has made its investments in FiOS, so the argument that Verizon is avoiding investment will not make sense.
That might not be the case in some other markets, where FiOS builds are not currently envisioned, and where scrutiny would increase if Verizon chose simply to resell cable fixed network services instead of upgrading copper networks to FiOS. Of course, some will argue Verizon has strategic plans to ditch the fixed line business altogether, which would similarly alleviate the immediate regulatory concerns.
