UPDATED: The nation's largest cable companies are forming a joint
venture with Sprint Nextel to better compete against Baby
Bells and satellite companies.
The deal between Comcast, Time Warner Cable, Cox and
Advance/Newhouse Communications and the wireless carrier speaks to the
fierce competition in the communications industry.
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The companies will "develop converged next-generation products for consumers
that combine the best of cable's core products and interactive features
with the vast potential of wireless technology."
Sprint Nextel President and CEO Gary Forsee said the joint venture is a
milestone for the wireless and cable industries and will benefit millions
of customers.
"It's what customers expect and have been demanding," Forsee said during a
news conference in New York this afternoon.
Comcast Chairman and CEO Brian Roberts said he and his cable colleagues have
been talking about ways to add a wireless component for more than a year.
Teaming with Sprint Nextel made more sense -- financially and
strategically -- than the two other alternatives: buying spectrum space at
auction and establishing a new mobile carrier would be expensive; and
teaming with a smaller wireless company wouldn't give the national
footprint and technological platform they needed.
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The 20-year joint venture calls for an initial investment of $200 million:
$100 million from Sprint and $100 million from the cable companies. The
money will bankroll research and development, national marketing initiatives
and back-office integration. Other cable companies will also be invited to
join the joint venture.
The first offerings will be out next year and sold through Sprint's 1,600
retail stores, cable company offices and third-party retailers such as
RadioShack.
Some services will be delivered through new wireless phones that will
connect cable companies' customers to Sprint's EV-DO (define) wireless
broadband network. For starters, customers will be able to access their
e-mail, home and mobile voicemail, digital video recorders and photo
programs.
"It will be fun to see what kind of product we can deliver and what kind of
integration [we can accomplish]," Jim Robbins, president and CEO of Cox
Communications, said.
Cable companies have been looking to plug the wireless hole in their
offerings. It's been easier for the Baby Bells to add wireless service to
their bundles because they have ownership stakes in mobile carriers.
For example, Verizon Wireless is co-owned by Verizon Communications and Vodafone, while BellSouth
and SBC co-own Cingular.
Telecoms have also moved into cable's turf recently by spending billions of dollars to install fiber-optic cables capable of delivering
TV and video.
Their wireless subsidiaries are also moving video content onto
handsets as 3G wireless networks continue to expand.
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