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SprintNextel, 4 Cable Providers Team Up to Offer Video Content for Cellphones

Posted on: Thursday, 3 November 2005, 09:00 CST

By Scott Leith, The Atlanta Journal-Constitution

Nov. 3--Five major companies -- SprintNextel and four U.S. cable operators -- are teaming for a first-of-its-kind venture to pair video offerings with wireless phone service.

The deal, announced Wednesday, means millions of cable customers soon will be able to get Sprint-branded wireless phones through their cable providers. That includes about 700,000 metro Atlantans who get service from Comcast, one of the cable operators taking part in the deal.

Those phones are being developed with the goal of offering extensive TV programming, along with access to e-mail and services like the ability to program a digital video recorder remotely.

The deal gives Comcast, Time Warner Cable, Advance/ Newhouse Communications, and Atlanta-based Cox Communications a long-sought parcel of options -- TV, broadband Internet, Internet-based phone service and wireless. The "quadruple play" of services, as it has been dubbed in the cable industry, is aimed at attracting new customers and locking in existing ones.

Sprint, meanwhile, will get access to millions of potential new users. The cable companies in the joint venture serve a combined 75 million customers nationwide.

The companies are sinking $200 million into the joint venture, which has a life span of 20 years. Half of the money is coming from Sprint.

"I really see this as the next frontier for our industry," said Brian Roberts, chairman and chief executive of Comcast, the largest cable company in the United States.

In the not-so-distant past, companies busied themselves in separate niches. Now, cable and telephone providers are increasingly trying to steal business from one another. With the Sprint/cable deal, traditional telephone companies -- such as Atlanta-based BellSouth -- find themselves under assault. The Baby Bells have begun moving into video offerings, but none has the reach that Sprint and the cable companies gained by joining forces.

"It's a pretty big deal," said Roger Entner, vice president of wireless telecom for Ovum, a consulting firm. "The big winner here is Sprint," which is led by Gary Forsee, BellSouth's ex-vice chairman.

Wednesday's announcement focused heavily on gee-whiz possibilities, including phones that will offer an array of services to make them feel as indispensable as a TV or computer, or what Forsee called a "third screen."

Eventually, the companies could offer a new type of phone that operates off a wireless network inside a person's home and then off a cellphone network elsewhere.

Cox Communications, which is controlled by Cox Enterprises, the owner of The Atlanta Journal-Constitution, led the nation's cable companies in rolling out phone service in many of its markets. Cox has found customer turnover decreases markedly when a user subscribes to multiple services.

President and CEO Jim Robbins said Cox users in some markets have adopted the company's phone services in big numbers. In Omaha, Neb., 40 percent of Cox cable users also get phone service from the company.

Comcast has dabbled in landline phone business in the Atlanta region. Comcast's local predecessors, MediaOne and AT&T Broadband, offered phone service to some customers, but it wasn't a big success.

Recently, Comcast quietly began offering digital phone service, which operates over the Internet, in preparation for a splashier rollout later.

Bundling possibilities Glenn Britt, chairman and CEO of Time Warner Cable, said the Sprint deal gives cable operators the opportunity to offer advanced, bundled services that will lure customers away from powerhouses Verizon Wireless and Atlanta-based Cingular Wireless, which is owned by BellSouth and fellow Baby Bell SBC Communications.

"We're not just adding plain old cellphone to cable services," Britt said. "It's the ability to tie services across the two platforms."

Much work remains. Craig Moffett, an analyst with investment research firm Sanford C. Bernstein, said in a report that he has viewed wireless as a "nice-to-have" option for cable companies, not a "must-have" option.

"While the deal is certainly not good news for the Bells, we do not believe that it will have a large near- or mid-term impact on Bell wireline or wireless business," Moffett said.

Bells mull possibilities Indeed, the Bells are working on their own version of the quadruple play. SBC, which serves parts of the West, Midwest and Southwest, has a TV offering in development. BellSouth is working on one, too.

In the meantime, BellSouth offers DirecTV satellite service.

Spokesman Jeff Battcher said the company has 460,000 DirecTV customers across its nine-state system in the Southeast who get their satellite TV service billed via BellSouth.

Cingular was nonplussed by Wednesday's announcement. The company leads the wireless sector in customers and already offers fancy services of its own, including some video.

"We welcome them (Sprint and the cable companies) to the game," said Cingular spokesman Mark Siegel.

"But they are late to the game, and they have a long way to go to catch up."

More cable companies could get involved in the venture. Robbins, of Cox, said managing even five players will be a key issue.

"The structure's going to take work to make it work," he said.

Ovum's Entner agreed: "You have to get people under one hat. It's going to be interesting."

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To see more of The Atlanta Journal-Constitution, or to subscribe to the newspaper, go to http://www.ajc.com.

Copyright (c) 2005, The Atlanta Journal-Constitution

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

S, CMCSK, TWX, COX, BLS, T, VZ, VOD, BLS, SBC,

Source: The Atlanta Journal and Constitution

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