March 31, 2005 12:01 PM PST

Time Warner Cable begins cell phone trials

Time Warner Cable has begun testing its own mobile-phone service in Kansas City, according to a company source, signaling a move by the cable industry to compete against local phone companies' wireless dominance.

Earlier this week, Time Warner Cable started marketing Sprint mobile phones to its subscribers in Kansas City, Mo. While the phones are branded and operated by Sprint, Time Warner Cable is handling billing procedures and marketing for the service, the source said.

A Time Warner Cable spokesperson confirmed that the company is "planning a trial in Kansas City with Sprint," but declined to say whether the trial has begun.

For many months, cable executives have hinted at their interest in offering cell phone service to their customers. During parent company Time Warner's quarterly earnings conference call in November, CEO Richard Parsons said the company would "begin to explore relationships in the wireless space."

Cable companies have had considerable success in bundling their TV programming with broadband Internet access and, in some cases, phone service. But wireless has always been a missing piece in their package of entertainment and communications services.

"We know, because of consumer behavior, that wireless will be an important part of that bundle," Don Logan, chairman of Time Warner's media and communications group, said in November.

The fact that the Baby Bell phone companies own most of the nation's cell phone customers does not sit well with cable companies. The nation's two largest services, Cingular Wireless and Verizon Wireless, are owned by the Bells. But Sprint, which is in the process of acquiring Nextel Communications, remains independent.

The Bells are also stepping into new territory to compete against their rivals. SBC Communications and Verizon Communications plan to spend billions of dollars upgrading their networks to speedier fiber-optic lines to offer video programming to their customers. The Bells have also heavily discounted their DSL services in hopes of chipping away at cable's nearly 2-to-1 market share lead in broadband.

Time Warner Cable has remained mum about its wireless plans, and is hoping to learn how to operate the business. If the tests go well, Time Warner Cable will one day offer its own branded phones, although no names have been decided, according to the company source.

 

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