Operators Bet on Mobile 'Value’
Sprint-Cable Phone Services Are Priced For Extra Features
By Todd Spangler -- Multichannel News, 12/3/2006 5:00:00 PM MT
Months after they initially expected to launch, Comcast and Time Warner Cable have begun selling mobile phone services through their joint venture with Sprint Nextel in selected test markets.
In Boston, Comcast launched a marketing campaign promoting the Mobile Access service just before Thanksgiving, and it is more passively selling the service in another major market, Portland, Ore. Time Warner recently started selling mobile phone service in Austin, Texas, and Raleigh, N.C., through direct-marketing pitches and plans to launch a wider marketing effort in those areas in January.
Neither company would disclose the number of mobile subscribers they’ve signed up. But both operators have released pricing — and their mobile services don’t cost less than those offered directly by Sprint.
| Cable’s Initial Sprint |
|---|
| Status of mobile phone offerings from operators in the Sprint Nextel joint venture: |
| Comcast: Launched in Boston, promoted with TV ads and available in Sprint stores. Currently available in Portland, Ore. Additional markets set for next year. |
| Time Warner Cable: Service available in Austin, Texas, and Raleigh, N.C. Plans to broadly market in those markets in January and deploy to all divisions by end of 2007. |
| Cox Communications: Trials in two unnamed markets; commercial launch set for January 2007. |
| Advance/Newhouse Communications: Trial in one unnamed market. |
In fact, Comcast’s prices are slightly higher than Sprint’s for what at first glance seem to be identical plans. For example, Comcast is charging $33 per month for 200 anytime minutes, whereas Sprint’s standard pricing for a 200-minute package is $29.99. Time Warner’s pricing in Austin for a 200-minute plan is also $29.99.
The joint venture, established by Sprint, Comcast, Time Warner, Cox Communications and Advance/Newhouse Communications in November 2005, is intended to continue the success cable companies have seen with “triple-play” offers by extending the bundle to a fourth service, mobile phones. But a key part of the bundling strategy is to offer a price break to customers who subscribe to multiple services.
TEXTING INCLUDED
What’s the deal? John Garcia, president of the Sprint-cable joint venture, said the pricing actually is a discount.
Here’s how he explains it: Mobile Access plans — the brand name being applied to all four cable operators’ mobile offerings — include 300 free text messages per month, an option that costs an additional $5 if bought from Sprint.
In addition, Garcia said, Mobile Access gives subscribers unlimited calling between wireless phones and their cable-provided landline phones; the ability to access home voice mail from their mobile phone; and other features, like the ability to view television schedules on a mobile phone.
“The customers will be asking when they buy this, 'Shouldn’t I get a discount?’ and the answer is, 'Yes — it’s a discount,’ ” Garcia said. “In the sales presentation, I hope we’re telling users that this is at least a $5 value.” He added, “We didn’t want a price discount to be the main reason they bought it.”
Comcast also defended its package as providing more value than a traditional wireless phone service.
“For $33, you get a Sprint phone with features that are integrated with Comcast services,” said Jennifer Khoury, senior director of corporate communications at Comcast. “To be interested in it, you need to be someone who’s interested in this experience.”
Comcast and the other operators in the joint venture believe additional benefits will attract subscribers to their mobile phone offers. For example, as with triple-play deals, subscribers will get one bill that includes wireless charges as well as TV, Internet and landline voice services. (The way the joint venture is structured, though, all mobile-services revenue will go to Sprint.)
Mobile video and TV content, provided by cable operators themselves and via Sprint’s partnership with MobiTV, is also available for an additional monthly fee.
FEATURES ON HOLD
But some of the more tantalizing features cable operators have talked about — such as being able to program a digital video recorder from a wireless handset — aren’t available out of the chute. Garcia said he didn’t have an estimate on when remote DVR programming might be available, and noted that additional engineering is required to put that into service.
“The cable industry has built closed systems and to access a headend, we have some security gateways we need to build to provide a trusted domain,” he said. “We wouldn’t want you programming your neighbor’s DVR.”
Some think cable companies will have a much tougher time signing up subscribers for wireless services than they have selling triple-play bundles.
Ron Kermisch, a partner with consulting firm Bain & Co., said about half of consumer wireless phone subscribers are actually business people. As such, he said, this segment of subscribers probably wouldn’t be interested in integrating their wireless phone with other home services. Indeed, folding mobile phone charges into one bill could actually complicate the process of getting reimbursed by an employer.
“Cable operators will have a challenge when they extend to the fourth element of the bundle,” Kermisch said.
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