If you’re like many St. Louis area residents and businesses, you rely on Charter Communications for your cable and internet service, so recent rumors of a Verizon merger with Charter probably has you wondering what impact this will have on your services, pricing, etc. The reality is that right now this merger is nothing more than a rumor, and neither side will publicly confirm reports of a possible deal, but at least for now, Wall Street seems to be paying close attention. On the day information leaked about a possible merger, shares of Charter Communications jumped more than 5%, meanwhile bondholders immediately expressed concerns that Verizon’s credit rating would likely be downgraded if it issues new debt in order to acquire Charter – especially after it took on massive debts to buy out wireless competitor Vodafone in 2014. If you’re an investor in either (or both) of these companies, there could be some bumps in the road ahead.
For the rest of us, who just rely on these businesses to provide us with wireless, cable and internet services, however, it is still interesting to think about what a merger like this could mean. As many cable and internet providers such as Comcast and Google Fiber are scrambling to upgrade their network infrastructure to include fiber optic technology, which can significantly increase bandwidth, it is possible that Charter and Verizon have a different vision for the future of cable and internet service. One that relies less on updating physical cabling, which requires a significant upfront financial investment, and more on the use of powerful wireless signals.
Verizon is already amidst the development of a 5G network, which would be able to carry more data, and it seems plausible that Charter and Verizon are evaluating the feasibility of transmitting cable and internet data wirelessly. However, 5G signals are (currently, at least) less stable than its 4G LTE predecessor, and would require the installation of more cell towers to effectively transmit the volume of information necessary to make this concept work. So, the logical next question becomes does eliminating the cost associated with upgrading wired infrastructure pay for the cost of adding more cell signals? And what does the cost structure of a wireless installation look like on the consumer end, because at the end of the day, what we’re all looking for is the fastest connection at the lowest cost.
Only time will tell if this Verizon acquisition of Charter Communications has legs, but it certainly is interesting to think about the possibility and what it could mean for the future of cable and internet providers as we know them today.