Comcast Xfinity is still competing with Verizon FiOS, but friendship seems the parent companies' future. Last week's Verizon-Comcast-TimeWarner wireless-spectrum and joint-marketing agreement still has Wall Street in awe. Bernstein Research's Craig Moffett amplifies his initial reaction (indeed, his anticipation) in a report to clients today:

"Verizon Wireless has acknowledged Cable's superiority on the ground, and Cable has acknowledged Verizon's in the air."
Despite all the FiOS-Xfinity rival advertising and even price-cutting, "they are not natural competitors… and they never were. ..
"Suddenly Verizon Wireless will begin marketing cable products and what Verizon has effectively validated as the superior set of ground facilities in all of their markets within a matter of weeks. And conversely the cable operators have conceded that they're never going to build wireless and they will start marketing Verizon's wireless service which they have now validated as the preferred solution in the air. And suddenly you have a sort of the best of both worlds solution for consumers being marketed under one umbrella...
"This is the beginning of the peaceable kingdom where everybody says, 'Look, you may have hoped that we were going to beat each other’s brains out, but that’s just not the case.'" 
Doesn't that mean less competition, and doesn't that mean high prices that squeeze consumers? "That will inevitably give rise to charges from some that this is some kind of a market allocation process, which by definition would be an antitrust violation. But I think the companies will have a pretty good argument, to say in fact, it’s not that, it is simply that we were never destined to be natural competitors" - in fact they don't complete, except in Philadelphia and a minority of markets where Verizon FiOS goes head to head with Comcast small business and consumer broadband Internet, voice, video.
Why now? Moffett notes Verizon's new post-Ivan Seidenberg management team is "led by Lowell McAdam who come from the wireless side of the business instead of the wireline side of the business." With McAdam in charge, "Verizon is first and foremost a wireless operator... willing to enter into a very, very significant strategic partnership that benefits the wireless business, but arguably dramatically de-emphasizes the wireline business" with its higher union wages and benefits and stricter work limits.
Won't the FCC squeak? Moffett says not: 1) Cable doesn't sell wireless phones and Verizon doesn't sell video or Internet, except in Philadelphia and a minority of other FiOS-equipped markets; 2) FCC has been after cable companies for years to stop "warehousing" wireless spectrum and sell it to operators. How can FCC now oppose such a deal? "It's very hard to say 'no, we’ve changed our mind.'...

"When I was talking to (Comcast ceo) Brian Roberts last Friday, he was... talking about this in similar 'frenemy' terms (like) Google and Facebook, for example. And saying it’s not unusual for companies to compete in one sphere (for example) between Verizon FiOS and Comcast in those regions where FiOS exists."
Even though Verizon is the clearest winner, Moffett is not recommending the stock, which he considers overpriced, given the company's flat profit margins. Rather he is recommending Comcast and TimeWarner, whose values should rise toward levels more appropriate to their higher profitability, now that they have more or less renounced one thing Wall Street feared: that they would spend billions building their own expensive competing wireless networks.
Where does this leave consumers? "It takes an enormous step towards wireless duopoly, but does it with far less regulatory friction than the AT&T transaction to buy TMobile," Moffett writes. "Policy makers may not like this, (but) it's not entirely clear how they get their hooks into it even if they wanted to try to stop it."
Moffett has written elsewhere how mass-market business dominance gives big companies pricing power, which leads to monopoly-type profits -- which eventually provokes government price controls. He's not raising that specter in the Verizon-Comcast-TimeWarner deals. At least not under today's FCC.