Small Ops Wait for Four-Play

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Chicago -- Small cable operators won’t be able to participate in Sprint Nextel’s wireless-phone venture with four large MSOs any sooner than early next year, an official from the cellular company said Tuesday.

And exactly when outside cable companies are able to take part in the venture hinges on how smooth the rollout by the original players is, according to Sprint Nextel vice president of product development Kevin Packingham.

“All of us benefit from more cable operators participating in the joint venture,” Packingham said during a session at The Independent Show here. “It needs to be a national footprint. There needs to be a critical mass of operators participating so the customers get the best possible experience when they’re using these services. The way that we will do this is somewhat evolving.”

Packingham offered a brief outline on the wireless venture that includes Comcast, Time Warner Cable, Cox Communications and Advance Newhouse Communications during a panel session on “The Quad Play.”

And at one point during a question-and-answer session, a surprisingly blunt Packingham said, “The economics on wireless stink,” when queried by the audience.

During his presentation, he explained that the upside for MSOs to add wireless to their current bundle -- video, voice and high-speed data -- is that they can benefit by offering new products that integrate all of those services.

Members of the National Cable Television Cooperative wanted at know at what point they may be able to join in the joint venture so they can make wireless part of their bundles. But that time frame is somewhat sketchy, according to Packingham.

The joint venture is trying “to create a road map, a user’s guide, to making these services available,” he said, adding that there are no definitive timelines yet for additional partners to be able to come onboard.

The joint venture’s goal is to have wireless service out in the market in the second half of the year, according to Packingham. “We’re already in a testing mode,” he said. “We feel very confident that the timelines are reasonable to get these services out there.”

The schedule for bringing on additional cable companies depends on the success of the initial rollout, according to Packingham.

“If everything goes as smoothly as we would hope, then we’ll move very quickly in the first part of ’07 to encourage additional participation and give everyone, let’s say, a user’s guide to get started,” he told the audience of small cable operators. “So keep your fingers crossed that the execution goes as smooth as everyone hopes it will.”

One operator asked if he should just roll out wireless phone service rather than voice over Internet protocol. Packingham said that wasn’t a good idea.

“The economics on wireless stink: It’s very expensive,” he said, advising the cable operator not to forego a VoIP deployment.

During his presentation, Packingham warned that consumers buying four services from one provider are going to expect a “pretty steep price discount.”

So participants in the wireless joint venture are either going to need to see incremental revenue for add-on services that result from the venture or to see a lessening of churn “to make this the right value proposition for our companies,” he said.

Fox Cable Networks senior VP of affiliate sales Sean Riley asked who would negotiate programming deals for content to appear on the joint venture’s wireless platform.

“Sprint has some really good agreements right now on the wireless side, and I believe most of the operators are trying to finalize their strategies on how they will start to integrate wireless-distribution rights as part of their larger carriage agreements,” Packingham said.

“We’re expecting the MSOs to get rights for things they think they can get as part of their other agreements, and Sprint will continue to get rights for everything it can possibly get,” he added.

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