Cable Operators

Taking the Time to Pivot

7/20/2007 8:05 PM Eastern

It’s been 20 months since Sprint Nextel and four of the biggest U.S. cable companies announced a joint venture to field a hybrid wireless phone/cable video service.

The service — branded “Pivot” — is being offered in only about 16 markets so far, within about a dozen cable-system clusters.

Low priority for the cable companies? Technical snags? Some other problems hindering a faster, wider rollout?

Not according to the companies involved, who say they’re just trying to double-check that everything works right before presenting the new product to their customers. Of course, in the meantime, all of them are aggressively rolling out their big growth product: wireline voice service using the cable-modem platform.

“We just want to make sure we do a lot of testing,” said Kena Lewis, senior director of public affairs and communications for Bright House Networks parent company Advance/Newhouse. Bright House is in the joint venture along with top U.S. operator Comcast, No. 2 provider Time Warner Cable and No. 4 Cox Communications.

“We hang our hat on customer service,” Lewis said. “Before we do anything, we want to make sure customers have a good experience.”

Operator Availability Monthly Fee 200 Minutes Monthly Fee Unlimited Mobile TV and Multimedia
SOURCES: Company reports
Bright House Networks Central Florida (Orlando) $33.00 $199.99 $15-$25 extra
Comcast Boston; Portland, Ore. $33.00 $199.99 $15-$25 extra
Cox Oklahoma, Phoenix, San Diego, Rhode Island, Central Connecticut $29.99 $199.99 $15-25 extra
Time Warner Cable Austin, Texas; San Antonio; Waco, Texas; Cincinnati; Dayton, Ohio; Kansas City, Mo.; Milwaukee and Green Bay, Wis.; and Raleigh, N.C. $29.99 $199.99 $15-25 extra

GETTING WIRELESS RIGHT

Evidently that hasn’t been entirely easy to bring about, as Bright House last week finally launched the service in Central Florida, one of five states where the cable company operates.

Advance/Newhouse CEO Bob Miron said at an industry conference last month that getting both the cable and wireless marketing operations melded plus “product integration issues” have slowed the effort.

“You just don’t get in the [wireless] business in 24 hours,” Miron said.

Innovations to take Pivot beyond a me-too wireless product are still on the way.

Sprint and its Pivot partners are working hard to figure out how to present video programming on a wireless handset in a simple way. Most cellphones require five to seven clicks to get video content. Sprint wants to drop that to two button pushes.

The slow development cycle has not gone unnoticed. “It’s not being rolled out as quickly as we expected and it’s not being talked about as much as we expected,” said telecom analyst Jeff Kagan.

Part of the answer is clearly caution on the part of Pivot partners. But there’s also a cultural difference between the quick-to-market, flash-bang world of wireless and the more risk-averse mindset of operators.

For instance, Pivot partners have made a huge effort to integrate billing across platforms and make sure the single bill is “actually accurate,” said Kevin Packingham, vice president of marketing and product development for Sprint. “We had to spend a lot of time. We tried every [billing] variation to try and fool the system.”

The bar was set high when the joint venture, a 20-year agreement, was announced in November 2005.

The new service would provide the so-called “quadruple play” allowing cable operators to offer a bundled package of voice, video, high-speed Internet and wireless telephony.

On the innovation side, the new service would allow cable customers the ability to view cable video content and program their home digital video recorders remotely via their cell phones.

The goal of letting mobile phones program digital video recorders has yet to be achieved, but will be part of the service later this year, said Packingham. Getting a cellphone to talk to the existing house information streams, be they Internet, VoIP or video, is the grand challenge of the partnership. The service already allows customers to call between their cell and home phones without using up wireless minutes.

“The real gem in this is making it extensible into the home,” said Packingham.

With Pivot poised to reach 40 markets this year and some technical challenges yet to be fully resolved, the partnership has switched out its chief executive. Out is John Garcia, who led the effort from the start. He’s moved over to become chief of Sprint’s product management division, reporting to the company’s marketing officer.

Replacing Garcia at the Pivot helm is Keith Cowan, formerly of BellSouth and more recently executive vice president at Genuine Parts. He reports to Sprint Nextel chairman and CEO Gary Forsee.

NOT HUGE PRIORITY

Kagan thinks the joint venture is moving slowly for another, more fundamental reason — cable operators aren’t particularly in a rush to field it.

“The cable industry is sold on wireless, but they don’t think they need it yet,” Kagan said. “They’re not losing money” to wireless competitors.

Operators are still in the best position to provide the quadruple-play bundle and nobody is close to stealing that market.

Verizon has promised to launch an integrated “quad play” this year, but so far it has concentrated on rolling out its FiOS TV service.

“At some point during the next year, we’ll see competitors get to the point where [MSOs] start to advertise the Pivot service” more aggressively, Kagan said.

When that happens, if Pivot is the product the partners first predicted it would be, analysts like Kagan will be in a better position to judge how important a quadruple play might be.

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