The nation’s three largest MSOs are close to signing an agreement with Sprint Nextel Corp. to supply wireless-telephone service to their subscribers.
The deal, if completed and executed rapidly, would make Comcast Corp., Time Warner Cable and Cox Communications Inc. the first large suppliers of four major forms of communication: television, Internet access, telephone and, now, wireless services.
According to a cable-industry executive familiar with the negotiations, the cable consortium will likely sign a Mobile Virtual Network Operator deal -- essentially a wholesale agreement -- with Sprint Nextel, which could occur in November.
The deal will initially involve giving the cable operators the right to resell Sprint Nextel wireless-telephone service under their own brand names and bundle it along with their current offerings of video, voice and high-speed-Internet service, the executive said.
The agreement with the three operators allows for the relationship to expand and include additional products and services.
While no details have been worked out, one such future service could allow a cable network to handle the handoff of a call from a network inside the home to the cellular network outside of the home, making it possible to use a home phone that uses Internet protocol to communicate to act simultaneously as a mobile phone.
The cable operators are trying to cash in a fast-growing piece of the telecommunications market in which they do not yet participate.
Domestic spending on wireless communications is expected to reach $158.6 billion in 2005 (a 9.3% increase over 2004), growing to $212.5 billion by 2008, according to the Telecommunications Industry Association.
Among cable operators, only Cablevision Systems Corp. and Mediacom Communications Corp. offer some variation on the quadruple play.
Cablevision allows its cable customers to order Sprint cell-phone service via its Optimum Store (www.optimumstore.com), but it does not bundle wireless with its triple-play voice, video and data package.
Mediacom has the right to resell Sprint wireless service in conjunction with its own voice-over-IP service (which uses the Sprint backbone), but Mediacom only began marketing any phone service about a month ago.
Time Warner Cable has been testing a similar Sprint-branded service in its Kansas City market, but it is unclear how much, if any, revenue that service is bringing in.
For its part, Sprint Nextel gets access to a large base of potential customers. The three cable operators combined have 38.7 million TV subscribers and pass a total of 70.8 million homes. Sprint Nextel, the third-largest wireless carrier in the country, currently has about 44 million wireless subscribers.
The cable companies joined forces last October to investigate offering a wireless service, including whether to buy a wireless carrier outright. While the group initially toyed with the idea of buying out Nextel Corp., according to cable-industry executives with knowledge of the consortium’s thinking, that idea was scrapped after considering the cost of such a deal and Sprint’s announcement that it would buy the carrier in December.
The consortium originally included St. Louis-based Charter Communications Inc., but it no longer does, according to the cable executive familiar with the negotiations. Other operators could get in on the deal at a later date.
Officials from Charter, Comcast, Cox and Time Warner all declined comment.
Sprint Nextel spokesman Nick Sweers declined to comment on whether a new deal is in the works, but he said his company is always open to expanding its relationship with cable operators.
“We continue to establish a growing number of relationships with cable companies,” Sweers said. “We have been since 2003.”
Kent Gibbons contributed to this story.
For more on Comcast, Time Warner, Cox and Sprint Nextel, please see Mike Farrell’s story on page of Monday’s issue of Multichannel News.