Sprint/Cable Wireless Venture Tries to Overcome Weak Start

By Roger Cheng Dow Jones Newswires

NEW YORK — The wireless joint venture between Sprint Nextel Corp. and a consortium of cable companies, unveiled with a bang nearly two years ago, has come to market with a whimper.

The deal allows cable companies to offer wireless service, filling in the missing link in the “grand slam” of services and depriving incumbent telecommunication companies of an edge. Yet, despite its obvious strategic value, the service has been rolled out at a snail’s pace, muddled by an unclear marketing message and, more recently, a change in management.

With wireless competition already stiff, critics say the business may fizzle before it gets a chance to take off.

“I think, ultimately, it’s more a question of when this will fall apart than if,” said Roger Entner, a longtime wireless industry observer who heads up the communications practice for IAG Research.

When Comcast Corp., Time Warner Cable Inc., Cox Communications Inc. and Advance/Newhouse Communications Inc. signed their deal with Sprint, it was hailed as a major blow to the telecom players, who viewed cellular service as the one advantage they held over cable. Telecom and cable have been engaged in an increasingly bitter war of services, with cable encroaching on the phone side and telecom starting to offer television.

Sprint, which now offers only wireless service after spinning off its traditional landline business, stood in the middle. Hungry for additional revenue, it partnered with the cable industry for a second time, and now takes the lead in running the service. The deal called for an investment of $200 million — half from Sprint and the balance from the four cable companies.

Following the splashy announcement in November 2005, Sprint and its partners tiptoed into a handful of markets. Its marketing message was unfocused, as it took a full year before the venture settled on Pivot as the brand name. The cable companies only began officially offering the service in the past few months.

“We haven’t got much feedback yet,” said William Power, an analyst at Robert W. Baird & Co. who covers Sprint.

Complicating matters, the venture’s president, John Garcia, left his post in late June to head product development at Sprint. Kevin Packingham, who directs products and services for Sprint and provides support to Pivot, said the move was more of an opportunity for Garcia. “You shouldn’t read too much into it,” he said.

Jim Patterson, who dealt with Sprint’s cable business, took over on an interim basis. But the change in management was a setback to the joint venture. “Here they lost a really strong leader,” Entner said.

Following the launch of Pivot, Garcia said in March that he believed the service held a “first-mover advantage” over the telephone companies in integrating the television and wireless experience.

Despite claims that it’s taking share, the larger carriers don’t appear to feel any significant pressure. Verizon Communications Inc. Chief Operating Officer Denny Strigl said the company hadn’t felt any impact from Pivot.

AT&T Inc., meanwhile, has captured the wireless industry buzz with the Apple Inc. iPhone. “We have the broadest array of services in the industry,” said spokesman Mark Siegel, declining to comment on Pivot.

While the cable companies and Sprint say the service grows at a rapid clip, they have refused to disclose their subscriber growth numbers — a basic metric that most carriers will report on a quarterly basis — or any numbers, for that matter.

General industry trends have hurt Pivot’s already slow expansion. The cable companies have insisted on a slow, market-by-market launch, rather than a nationwide rollout, so a lot of consumers don’t know about it.

A myriad of wireless service providers are attempting to carve out their own niches. Several have already failed, with Walt Disney Co.’s ESPN Mobile and Vivendi SA and Viacom Inc.’s Amp’d Mobile the most notable victims.

Another problem is the lack of services that set Pivot apart. Features such as controlling the home digital video recorder with a cell phone, promised two years ago, still haven’t shown up.

“It’s not a willy-nilly business,” Entner said. “The cable guys thought it was so easy. There was massive underestimation of what it really takes to get that done.”

Sprint and its partners argue that Pivot is jointly pushed by all parties, rather than one partner going at it alone, and that it receives more marketing support.

“You’re getting complete endorsement from all of the senior executives from the parent companies,” Packingham said. Sprint sticks by its goal of making Pivot available in 40 markets by the end of the year. It currently serves 19 markets.

(c) 2007 Deseret News (Salt Lake City). Provided by ProQuest Information and Learning. All rights Reserved.