FORT WORTH, Texas – Sprint Nextel launched a major assault in the competition between phone companies and their cable television counterparts Wednesday by announcing an alliance with four of the largest cable giants to market wireless services and products.
The agreement between Comcast, Time Warner, Cox Communication, Advance/Newhouse Communication and Sprint to market a bundle of services is the starting pointing in the cable companies’ grander ambitions. The ability to bundle – a voice line, cable programming, high speed Internet and wireless – will be the most important component of the venture in the short term, the companies said. But a range of new products is also in the works.
The companies said they are working to allow customers to use wireless hookups to view cable television programming and the ability to program a home digital video recorder remotely, using a cell phone. Customers will also be able to access e-mail and voice mail accounts in addition to other innovative services through mobile devices. The companies said the drive is to create a third essential screen for consumers: the cell phone display added to television and computers.
“Sprint is making a bet that consumers are ready for something like that,” said Albert Lin, a research analyst with American Technology Research.
The agreement calls for the four cable companies to invest a combined $100 million in the venture with Sprint Nextel contributing an additional $100 million. Definite plans on launching a “quadruple bundle” were not announced but the companies said the earliest they would offer such bundled services would be the first half of 2006. The price of the service will vary by market and will be co-branded by the respective cable company and Sprint Nextel. Sprint has negotiated similar wireless deals with ESPN, Walt Disney and Virgin Mobile.
“This is the next chapter in a revolution,” said Brian Roberts, chief executive and president of Comcast, during the launch news conference.
The cable announcement came days after regulators’ approval of the mergers of SBC Communication with AT&T and Verizon Communications with MCI. Both cable and the phone companies continue to position themselves to do battle. Just three years ago cable companies went through a massive upgrade to transfer their analog network to digital. The improved networked rankled customers who complained of higher cable rates, but allowed for high-speed Internet access, more channels and the ability to offer phone service.
It is now the phone companies turn to upgrade networks to handle the competition.
Lin said the partnership is a good first step for cable. What still needs to be worked out is copyright arrangements, he said.
While a company like Comcast has permission to air content through its cable operation, new arrangements must be reached to air via mobile devices.
“Five years ago cable and video content providers teaming with wireless was unthinkable. But they have seen how complex media is and they are working to figure out how the new environment can work to their advantage,” said Lin.
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