|Cable operators are adding cellular capabilities that will allow customers to use phones to watch video and remotely program digital video recorders.
It’s the product of a new wireless-cable venture that’s betting consumers will pay to be able to watch cable TV anytime and anywhere through their phones. Time Warner Cable, Comcast, Cox and Brighthouse, the cable arm of Advance/Newhouse, have entered a joint venture with Sprint Nextel that will integrate cellular phone services into their arsenal of telephone, video transmission and high-speed data services.
Bigger is better
In its simplest sense, it’s a classic case of bigger is better -- cable operators upping their “triple play” consumer marketing bundle into a “quadruple play.” But it’s also a sea change in how TV is accessed. The integrated cable and cellular services will allow consumers to use their cellphones to access content coming through their set-top cable boxes -- from prerecorded programs stored on digital-video recorders to video-on-demand to live streamed TV -- as well as check on their home e-mail accounts and voicemail.
“This is cable going wireless inside and outside of the house,” said Comcast CEO Brian Roberts, as the four cable CEOs and Sprint Nextel CEO Gary Forsee addressed press today at New York’s Hotel Plaza Athenee. “This is a tremendous competitive advantage over the bells and satellite companies.”
Cable operators have battled an onslaught of competition, first from DirecTV and Echostar’s Dish, and more recently from telecom companies such as Verizon, which has launched FiOS video service, and SBC, which is offering video service through its Project Lightspeed. Quipped Cox Communications CEO Jim Robbins: “We couldn’t understand why Verizon and Cingular didn’t want to talk to us.”
The four cable operators represent 41 million subscribers. Sprint Nextel boasts nearly 46 million wireless subscribers. The joint venture has a 20-year term and calls for Sprint to contribute $100 million and the cable companies to collectively ante up $100 million to be used for development of future converged services, national marketing campaigns and administrative costs. Other cable operators have been invited to join and, Mr. Roberts said, Charter Communications is in the progress of entering the partnership.
Glenn Britt, CEO of Time Warner Cable, said 75% of the company’s telephony customers are in the current “triple play” bundle (phone, cable and broadband Internet access) and noted additional services tend to up cable’s ability to hang onto customers.
“Cable is fundamentally a local business and our competitors are much larger geographically,” he said.
The price of the integrated offering will be set on a market-by-market basis, agreed to by Sprint and the cable company serving that particular market. The cable companies will be responsible for billing customers and for customer service in the territory for the converged offering.
It’s too soon to determine the extent of the marketing campaign the joint venture will launch, but the phones will be co-branded by Sprint Nextel and the cable operator that covers the market in which the retail outlet is located. According to cable executives involved, it’s also too soon to tell where the advertising opportunities might lie within the service, but one will likely evolve. Mr. Britt pointed out cable advertising is becoming more targeted in nature through such services as VOD.
“The key is to get wired and wireless there first and create innovative revenue models for advertisers and content providers,” Mr. Roberts said. “Who’d have thought ringtones would explode the way they did? Look what they’ve done for the music industry.”