Cox, Verizon Spectrum Deal Shows What Might Have Been for ATandT

News Analysis: Cox Communications decided after buying a bunch of spectrum that it wasn't going to be a wireless company after all. So it sold its spectrum holdings to Verizon for $315 million and set up a marketing deal.

In the world of "could of, should of, would of" you have to ask yourself what might have happened if events had played out in some other way. For example, what might have happened if AT&T, finding itself low on spectrum, had decided to buy some from companies that had it but didn't need it. For example, suppose it had bought the spectrum holdings from Cox Communications.

On Dec. 16, Verizon Wireless did just that. Cox has agreed to a $315 million deal with Verizon that will transfer all of its 20MHz Advanced Wireless Services (AWS) spectrum licenses to Verizon. This deal gives Verizon access to 28 million new customers, and it gives Cox and Verizon the ability to sell each other's services. In other words, you'll be able to go into a Cox Wireless store and buy a Verizon Wireless phone. You will also be able to buy Cox services at a Verizon store.

Right now, that's about all that this agreement does, but out of it comes more access to Verizon Wireless for its 4G customers, and Cox gets another outlet and another stream of revenue. It's all pretty low-key. While the Media Access Project is claiming that this is a cartel of some kind, that doesn't seem to be the case. Cox had already dropped its efforts to become a wireless provider long before the deal with Verizon, and my discussions with Cox executives indicate that they're not expecting to take over Verizon's FiOS bundled telephone, Internet and television service.

In fact, Todd Smith, director of media relations for Cox, sees things much differently. "Our 3G wireless venture with Sprint had a lack of wireless scale, and we didn't have 4G," he said. But Smith added that there was obviously a demand for wireless among Cox's customers and the company wanted a way to accomplish that. The result is that each is selling the services of the other. Currently, Cox isn't selling wholesale services for Verizon, however, although that might happen in the future.

While the deal has been signed, it won't take effect for a while. "The spectrum deal has to go through the regulatory process," Smith said. "The joint sales agreement is something we'll be working on over the next few months." This means that the sale of the Cox spectrum has to be approved by the Federal Communications Commission.