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This Could Define US Tech in October

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Part 10
This Could Define US Tech in October PART 10 OF 11

How Sprint Could Save Comcast and Charter

Cable going wireless

While Sprint’s (S) heavy debt load and unprofitable history may have been making potential partners and investors hesitant to back the company, for Comcast (CMCSA) and Charter Communications (CHTR), this could be a redeemer.

Eager to fight off the wave of cord-cutting that is eroding their base of valuable customers, Comcast and Charter have been seen drifting toward wireless services to enrich their cable packages.

How Sprint Could Save Comcast and Charter

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The reasoning seems to be that adding a mobile service to a bundle of pay-TV and broadband Internet would dissuade customers from ditching cable contracts for slimmer online video services such as those offered by Netflix (NFLX) and Amazon.com (AMZN).

Riding on Verizon’s rails is restrictive

Comcast recently launched a wireless service, and a similar service from Charter is expected to go live next year.

For their wireless services, Comcast and Charter are relying on Verizon’s network, and so they’re essentially reselling Verizon’s network under their own brands—an arrangement somewhat similar to the one Alphabet’s (GOOGL) Google has with Sprint and T-Mobile (TMUS) for its Project Fi.

But the network reseller agreement between Comcast, Charter, and Verizon is restrictive. Verizon doesn’t allow these cable companies to offer their wireless services outside their footprints. A deal with Sprint could free Comcast and Charter from this restriction.

Sprint may offer better terms

Seemingly desperate for a deal to end its woes, Sprint may allow Comcast and Charter more favorable network reseller terms than they are getting from Verizon.

Sprint’s parent company, SoftBank, has reportedly held talks with Comcast and Charter, and those talks are believed to revolve around rallying these cable providers to acquire or invest in Sprint. In May, Comcast and Charter agreed that none of them would enter a wireless deal without consulting the other, which may explain why SoftBank has approached both of them.

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