November 7, 2005 4:00 AM PST

Cable goes for the quadruple play

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on working with its parent company to develop integrated products. In fact, it is currently testing a dual-mode cellular-to-Wi-Fi service that is designed for business customers.

"We are looking at a number of ways in which we can work with our parent companies," said Clay Owen, a spokesman for Cingular. "We already do some marketing and distribution with them, which has been a big benefit to us. We think that the latest announcement from Sprint Nextel and the cable companies is an attempt by our competitors to catch up to where we are already headed."

"Each set of companies is going into the other's market. The question is, who can get there faster?"
--Jim Penhune, analyst, Strategy Analytics

By contrast, Verizon Wireless, co-owned by Verizon Communications and European wireless carrier Vodafone, has been reluctant to bundle or jointly develop services that span the wireline and wireless businesses.

"We do some bundling with other Verizon services," said Jeffrey Nelson, a spokesman for Verizon Wireless. "But it's not core to our business. We do it where make sense, and it's not heavily promoted. There are some benefits to bundling, but it's not something we are focused on right now."

As for the new integrated services that the cable companies and Sprint Nextel promise, Nelson said he isn't convinced that there is a market for them.

"It's an interesting idea," he said. "But there's no evidence that there is strong demand for those kinds of services. Given the minimal investment that they put into the relationship, it doesn't seem like any kind of serious offer will be ready any time soon."

The cable companies' entrance into the wireless market is another sign that the battle to win consumers' dollars on communications services and entertainment is heating up. For the past couple years, cable operators and telephone companies have collided more and more as they have encroached on each other's businesses.

First, the phone companies got more aggressive in rolling out their broadband DSL service to combat the cable companies' cable modem service, and they have gained market share mainly by competing on price. Then the cable companies fought back by introducing VoIP, whose Internet-based calling system competes directly with the phone companies' traditional telephony business. The cable companies, too, have seen success in winning new voice customers.

The phone companies, namely Verizon and SBC, have answered this challenge by spending billions of dollars to build new networks that will support television service, cable's traditional market. Now cable and telephone companies will go head-to-head in wireless, which, until now, has been dominated by the traditional telephone companies.

As the battle has intensified, so has the emphasis on the service bundle. The hope is that if customers buy more than one service, they will be less likely to cancel any one service in that bundle. The benefit for customers is simplified billing, an overall discount or better value on the total package of services they are buying. And in the future, the bundle will likely mean more integrated services.

Ultimately, cable operators and phone companies will likely offer very similar service packages.

"Each set of companies is going into the other's market," Penhune said. "The question is, who can get there faster? When you get down to it, it's a lot easier to launch a VoIP service to compete against the phone companies than to build a new network to compete against the cable companies on video."

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3 comments

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What happens to the independent VOIP providers?
What happens to the indpendent VOIP service providers as cable operators begin to offer their own VOIP service? Will the independents go the way of @Home and the independent broadband providers, taken out by a comobination of predatory pricing and ferocious lobbying? Is the regulatory landscape different for VOIP?
Posted by (9 comments )
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What happens
There is no regulatory landscape for VoIP really. if the local cable company was using @home for network services, then you were using @home.

The is not the case with VoIP, there hundreds of providers and you are free to go with almost any one of them.

Cable VoIP might see mainstream adoption, but I don't think it will put the cheaper carriers out of buisness.
Posted by Dachi (797 comments )
Reply Link Flag
Why not make it an Octa-play?
This quadruple play stuff is child's play. Why not go Octa? Bundle
SprintNextelTimeWarnerSiriusOnStarNapsterTiVoNetflix-landlord/
mortgage together. The content and services provided by this
bundle would have synergistic synergies and would reach the
consortiums' ultimate goal: draining every last cent from the
consumers' wallet. ;-)
Posted by stanshih (28 comments )
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