News

Sprint Freezes Pivot

11/04/2007 7:00 PM Eastern

The near-term wireless ambitions of four cable operators took a hit last week, as Sprint Nextel disclosed it won't expand the Pivot mobile-phone service to markets beyond the 33 where it's currently available.

Sprint Nextel acting CEO Paul Saleh announced the company will halt the rollout of Pivot, which is marketed by Comcast, Cox Communications, Time Warner Cable and Bright House Networks, and described the product as “still very complex to provision.”

“As our focus is on simplifying the business — and particularly focusing on the customer experience — we have made a decision not to expand that service in other markets or other stores,” Saleh told Wall Street analysts during the company's third-quarter earnings call.

Pivot is currently available in 33 markets and in about 20% of Sprint's stores, according to Saleh. Sprint had expected to launch Pivot in 40 markets by the end of 2007. None of the joint venture's members has disclosed subscriber numbers.

MSOs ADDRESS ISSUE

What's next for the cable partners? Time Warner Cable spokeswoman Maureen Huff said the operator is “currently reviewing other options for expanding wireless service.” She wouldn't say whether that means the operator is considering offering a mobile service outside of the Sprint joint venture.

Cox spokesman David Grabert said Sprint's change of plans doesn't affect areas where Cox already offers the service (Arizona, San Diego, Oklahoma City, New England, Northern Virginia and Orange County, Calif.). “Our highest priority is to ensure that every customer has an efficient and superior experience with Cox,” he said, adding that the company has been “pleased with the consumer response.”

Representatives for Comcast and Bright House Networks declined to comment on Sprint's announcement.

“Wireless is not something that cable can ignore,” Pali Capital analyst Rich Greenfield said. “But the Sprint/cable joint venture was never viable. Cable partnered with one of the weakest, if not the weakest, wireless providers.”

Added Greenfield: “Joint ventures are always complex, and Sprint has enough of their own problems.”

Overall, Sprint reported $10 billion in revenues for the quarter ended Sept. 30, compared with $10.5 billion in the year-ago quarter. Net income was $64 million, versus $279 million in third-quarter 2006. The company reported a net decline of 60,000 total wireless subscribers in the third quarter, losses Sprint said were partially offset by growth in wireline revenues.

Saleh, Sprint's chief financial officer, became acting CEO Oct. 8, after chairman and CEO Gary Forsee was forced out by the company's board. Forsee led the deal to form the joint venture with the four cable operators, announced in November 2005.

'DIFFICULT TO DELIVER'

According to Saleh, “the unfortunate part is that [Pivot] is still very complex to provision” making it “very difficult to deliver in a timely and a simple process to the point of sales. So, as a result of that … we've just stopped the additional expansion of that product in our stores.”

However, Saleh noted: “We are still very strategically aligned with the cable companies. We are working very hard with them on simplifying that offering to the marketplace.”

This summer, Forsee called the pace of the commercial deployment of Pivot “a disappointment” and described systems-integration work that was needed to speed up customer activations.

The same four cable companies partaking of Pivot are also partners in SpectrumCo, which acquired Advanced Wireless Services (AWS) spectrum in a Federal Communications Commission auction last year. Sprint sold its 5% interest in SpectrumCo earlier this year.

Meanwhile, Sprint's business of selling access to cable operators for voice-over-Internet Protocol connections has been swelling. At Sept. 30, the company was providing telephony services to 2.6 million cable VoIP customers — twice as many as the third quarter of 2006. Sprint's cable VoIP customers include Time Warner Cable.

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