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Comcast Getting Serious About The Wireless Industry

Comcast to Jump Into Airwaves Auction

This week Comcast announced it will be participating in the federal government's upcoming spectrum auction in a move that indicates the cable giant is planning to jump into the competitive wireless industry


Comcast Corp. said Wednesday it plans to enter the government's upcoming spectrum auction, showing the cable giant may be serious about another push into the increasingly competitive wireless industry.

While Comcast executives didn't give details on their plans, analysts said the company could spend several billions of dollars to buy up airwaves being made available for wireless services. The company would be bidding against traditional players like AT&T Inc. and Verizon Communications Inc.

The airwaves are being auctioned off later this year by the Federal Communications Commission, which is repurposing spectrum it once set aside for television broadcasts. The FCC is offering to pay TV stations to go off the air or move their broadcast to free up the airwaves it plans to resell to the highest bidders.

Comcast, whoe NBCUniversal owns 28 local NBC and Telemundo stations, according to its website, has said it would sell some of its TV licenses in the FCC auction, something that could help pay for the wireless bids.

New Street Research analyst Jonathan Chaplin estimated Comcast could spend $3 billion to $5 billion in the auction, net of what it gets for selling some stations, which he assumes will be $1 billion to $2 billion.

Comcast has taken other steps to explore adding cellular services to its broadband and television offerings. Last year, Comcast informed Verizon it would execute a 2011 agreement that allows Comcast to resell Verizon's wireless service, but it has yet to offer any such service. It already has a vast Wi-Fi footprint of more than 13.3 million hot spots that could anchor a mobile offering.

MoffettNathanson analyst Craig Moffett suggested that one reason Comcast shares have languished recently—down 13% over the past three months despite its stronger operating performance—is investor cautiousness about elevated capital spending with an entry into wireless. He said a frequent question from investors is whether such spending could disrupt Comcast's share buybacks and dividends.

Comcast said Wednesday it won't be reducing its $5 billion in buybacks if it acquires spectrum in the auction. Comcast shares were up 3.8% in afternoon trading.

The entrance of Comcast also shifts the dynamics of the auction. In the last major FCC auction, which ended in January 2015, total bidding was almost $45 billion in part because another pay TV operator Dish Network Corp. was aggressive in buying up licenses. Dish has yet to detail its plans for its vast airwaves holdings.

The cable industry has flirted with offering wireless service before. A group of cable companies—including Comcast, Time Warner Cable and Bright House Networks—bought spectrum in a 2006 auction but agreed to sell it to Verizon five years later. A group of major cable companies also offered wireless service through Sprint Corp. in a venture called Pivot but that ended in 2008.

But the evolution of the wireless business—the majority of traffic growth is coming from video—may make it more attractive for Comcast amid investor concerns about cord-cutting.

"Our definition of broadband is totally different today than it was five years ago for what you get as a consumer," Comcast CEO Brian Roberts said Wednesday. "I think that goes back into whether we can do something creative in the future, whether that's involving spectrum or Wi-Fi or some of the existing relationships we've got."

Source: Dow Jones Business News






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