Are Comcast and Charter Setting Themselves Up for a Major Wireless Play?

The cable industry is well known for interesting machinations. The most recent is a wireless agreement between Comcast and Charter Cable that could have significant ramifications down the road.

Yesterday, the companies announced an agreement under which the multiple system operators (MSOs) agreed to make no moves in the wireless industry without the other for one year. In addition, they will work together to create operating platforms, work through technical standards development and harmonization, develop device forward and reverse logistics and on emerging wireless technology platforms.

This interesting announcement would have been even more intriguing if it had been made during the Obama administration. Comcast and Charter, two huge and powerful MSOs, are working together to develop technology, set standards, and do other things that obviously will be in their best interests.

Where does that leave other MSOs and their subscribers? Once executives in Stamford and Philadelphia decide on the path forward, vendors will have no choice but to quickly fall into line. Comcast and Charter more or less dictate the way forward and, in the bargain, encroach on the role that is supposed to be played by consortium CableLabs.

This seems to run close to some lines that are obvious even to a non-lawyer. It is also obvious that scrutiny of such an arrangement will be less under the Trump administration.

Chris Mills at BGR suggests that the move hints that Comcast and Charter may start their own network or buy one of the existing players, presumably Sprint or T-Mobile. His commentary enumerates the reasons that such an acquisition would be good for the wireless and cable companies and bad for subscribers.

Sprint, he reasons, would win because it needs the cash to “become a more serious competitor.” T-Mobile would win by cashing out at the right time. Consumers would lose because reduced competition would lead to higher costs.

Setting of higher rates in the absence of competition is typical marketplace dynamics. There is another worrying element, however. Mills points out that cable operators are largely dominant in their areas (though this is less true today than a decade ago). If Comcast and Charter added wireless to their video, data and wireline triple plays, it would very difficult for subscribers to opt out of any one offering:

Quad-play is particularly problematic because of the regional monopolies cable companies already have in the US. If cable companies end up only offering cell service to customers who also subscribe to their cable bundles, you end up with a weird situation where customers get locked into Comcast’s wireless network, even if Verizon has much better wireless signal in their area. This isn’t a dystopian fiction, either — Comcast’s newly-announced cell service is only available to cable subscribers for now.

Even if the companies develop technology together, they may need to wait and buy a wireless company. Mari Silbey at Light Reading points out that even the two cable companies together don’t own enough spectrum to start a network from scratch.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.