Charter Communications and Comcast Corporation, the two biggest cable operators in the U.S. agreed to look into ways to work together to compete better nationwide in the wireless business with giants in the industry such as Verizon Communications and AT&T.
Both of the cable companies hold agreements with Verizon which give them the right to re-sell service on the cellular network of Verizon in their specific territories.
Now, they want the combined size of the two to negotiate contracts that are more favorable for reselling the wireless data and phones while taking advantage of wireless technologies that are emerging such as 5G.
The two cable providers also have agreed that if they want to enter a deal with another wireless provider that is not Verizon or want to buy a wireless operation within the next 12 months they must do it together.
Charter and Comcast executives said this partnership would give them the opportunity to become competitors at a nationwide level in the wireless industry with AT&T and Verizon.
The partnership of the two cable giants could lead to additional innovative products thanks to engineers for both companies working closely with one another, as well as the potential for lower prices for their customers through gaining leverage in negotiations with Verizon and or other wireless operators.
Comcast, the largest cable operator in the U.S. and Charter the second largest are looking for new revenue sources as demands of the consumer for cable packages for TV drops.
The two are also facing a threat over the long term from wireless businesses such as AT&T that are building 5G wireless services networks that could give super-fast speeds for Internet on mobile handsets.
In April, Comcast introduced a new wireless service that allows users to connect using its 16 million hotspots with WiFi and the cellular network of Verizon as its backup.
It is also planning to introduce the wireless service to customers by the early next month.
Charter said it is planning to introduce its own wireless service in 2018 but its collaboration with Comcast could give it the opportunity to move quicker in offering it.
The U.S. cable industry has a past of working with one another. Charter and Comcast are both Cable Labs members. This is a nonprofit group researching the latest and new technologies for the cable industry.
Both companies serve regional territories that are separate. Comcast has close to 29 million subscribers in cities such as Boston, Chicago and Philadelphia Charter, which last year bought Time Warner Cable, has approximately 26 million clients in and around Los Angeles and New York.
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