Comcast, the nation’s largest cable provider, has purchased a $150 million stake in broadband equipment provider Arris Group, which in December purchased Motorola Home, a division of Google’s Motorola Mobility, for $2.35 billion in cash and stocks.
The newly intertwined trio subtly highlights the ways in which the Internet-connected world is shifting and the cable companies and wireless carriers are finding areas of overlap.
By the terms of the December deal, Google was promised $2.05 billion in cash and about $300 million in newly issued Arris shares, representing about a 15.7 percent ownership interest in Arris.
Comcast is acquiring 10.6 million Arris Shares, the company said in a Jan. 14 statement. The deal is conditional on the closing of the Google deal, and Arris officials have said they expect their deal with Comcast to close alongside their deal with Google sometime in the second quarter. Ultimately, Google and Comcast will each own about a 7.85 percent share in Arris.
“This investment by one of our largest customers is a strong indication of customer support for the Motorola Home acquisition and its potential to accelerate innovation to the benefit of the industry and consumers,” Bob Stanzione, Arris’ chairman and CEO, said in a statement.
Arris, in its December statement, said the acquisition of Motorola Home will enable it to deliver next-generation consumer video products and services and to benefit from Motorola Mobility patents. Motorola’s extensive patent portfolio was a top reason Google acquired it. Google was sorely in need of patents with which to defend itself against rival Apple.
“The industry faces its biggest technology transformation, and together Arris and Motorola will be able to accelerate related innovations such as the introduction of the IP Connected Home environments that service providers need and that their consumers crave,” Dennis Woodside, CEO of Motorola Mobility, said in a statement.
That technology transformation is being seen throughout the industry. On Nov. 7, 2012, AT&T introduced Project Velocity, its three-year, $14 billion plan to upgrade its network and pursue new initiatives, which include the connected car and a connected home, IP-based security system.
Google’s connection to the cable world extends beyond Comcast. Last summer it introduce Google Fiber, a sort of uber television and high-speed Internet service. Its connection speed is 100 times faster than broadband instant downloads. Google Fiber is currently available only in Kansas City, Kan., and Kansas City, Mo., but it’s slowly expanding.
Everybody likes fast Internet service, but not everyone is comfortable with Google controlling both the Internet and people’s physical access to the Internet—it gives Google a tremendous amount of negotiating power with ad companies as well as TV and movie distributors, not to mention a lot of user data.
A more controversial example of deals budding where rivalries once stood was Verizon Wireless’ December 2011 announcement that it had entered an agreement with SpectrumCo—a joint venture between Comcast, Time Warner and Bright House Networks—in which Verizon would purchase spectrum from the cable companies, which would also bundle Verizon Wireless’ services with their own.
Sen. Al Franken (D-Minn.) feared the deal would result in less market competition and ultimately higher prices for consumers.
“These joint-marketing agreements will turn these rival companies into partners rather than competitors,” Franken said in a Feb. 1, 2012, letter to the Federal Communications Commission.