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VZ Is Optimistic about Its MVNO Agreement with Comcast, Charter

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MVNO agreement with Verizon

Verizon continues to view its mobile wholesale services as profitable. The company is optimistic about the business of licensing wireless agreements because it can provide growth opportunities, especially when Verizon’s MVNOs (mobile virtual network operator) are targeting segments that it doesn’t actively pursue.

During the Morgan Stanley Technology, Media & Telecom Conference held on February 28, 2017, Matt Ellis, Verizon’s chief financial officer, talked about Verizon’s MVNO deal with cable companies. Ellis said that it would be interesting to know about the economics of the MVNO agreements with cable companies such as Comcast (CMCSA) and Charter (CHTR) in 2017.

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The relationship between Verizon and Comcast dates back to 2011. According to a FierceCable report, in 2011, Verizon purchased an AWS-1 (Advanced Wireless Services) spectrum from Comcast, Bright House Networks, Cox, and Time Warner Cable. As part of this agreement, Verizon offered access to its wireless network “in a potential MVNO offering.”

Recently, Comcast announced that it would be renting spectrum from Verizon to provide its own wireless service in 2017. Charter, too, recently announced that it would be activating its MVNO agreement with Verizon and would be unlikely to bring a product to market until the end of 2017, with no significant ramp-up expected until well into 2018.

As MVNOs, Comcast and Charter will gain access to Verizon’s network services at wholesale rates and will sell these services to their customers.

Increase in mobile video data traffic

Wireless networks are increasingly coming under pressure regarding their speed and latency as more and more viewers stream videos over the Internet. A huge chunk of mobile data traffic is composed of video streaming, which drives wireless carriers’ data consumption.

According to Cisco’s (CSCO) VNI (Visual Networking Index) at the end of 2015, video constituted ~61% of mobile data traffic in the United States. It’s expected that by the end of 2020, this figure will rise to ~77% of US mobile data traffic.

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