November 2, 2005 6:47 AM PST
Cable companies call on Sprint Nextel
Comcast, Time Warner, Cox Communcations and Advance/Newhouse Communications plan to bundle wireless phone service from the new alliance with their existing high-speed data, voice and video packages. Cable companies have used bundles of services effectively to compete against telephone companies like Verizon Communications and SBC Communications, which are each starting to enter the video market.
The deal with the cable companies will likely differ from other reseller deals that Sprint Nextel has struck with companies like Virgin Mobile, ESPN, and soon-to-launch SK-EarthLink. The cable companies will work with Sprint Nextel to develop new devices and services for customers. For example, they might allow people to use their cell phone to program video recorders.
Yet the promise of convenience and savings is more likely to draw consumers to wireless phone and cable TV service bundles, said Mike Paxton, a senior analyst at In-Stat. The marketing blitz that $200 million of combined investment will buy should also help attract customers, he added. Sprint Nextel is footing $100 million for the new joint venture, while the consortium of four cable companies will invest the other $100 million.
"This is something the cable industry...something they've been talking about for close to four years," Paxton said. "The real meat in this announcement is that some industry leaders have committed some serious cash to making this happen."
It has been no secret that the cable companies have wanted to get into the wireless market. This consortium has been looking at the possibility for doing such a deal for about a year. Time Warner has already been testing out a relationship with Sprint in Kansas City.
"We've always said that wireless would be the next element of the bundle to offer the quadruple play," said Mark Harrad, a spokesman for Time Warner Cable. "The bundle has proven to be a big selling point in terms of residential customers. And the phone companies already have wireless, and now they're moving into video."
The new joint venture is expected to launch next year. The cable companies will sell a co-branded wireless service through Sprint's retail stores and Radio Shack stores.
The deal will be mutually exclusive for the next 20 years.
CNET News.com's Alorie Gilbert contributed to this report.
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