Chicago— Small cable operators won’t be able to participate in Sprint Nextel Corp.’s wireless-phone venture with four large cable operators any sooner than early next year, an official from the cellular company said last week.
Exactly when outside cable companies will be able to take part in the venture hinges on how smoothly the rollout by the original players goes, according to Kevin Packingham, Sprint Nextel vice president of product development.
“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.”
Packingham talked about the wireless venture — which includes Comcast Corp., Time Warner Cable, Cox Communications and Advance/Newhouse Communications — during a panel session on “the quad play.”
A surprisingly blunt Packingham said that “the economics on wireless stink” when queried by the audience. During his presentation, Packingham explained that the upside for cable companies to add wireless to their current bundle — of video, voice and high-speed data — comes in offering new products that integrate all of those services.
Members of the National Cable Television Cooperative wanted to know at what point they may be able to take part in the joint venture.
The joint venture, “already in a testing mode,” plans to have wireless service out in the market in the second half of the year, Packingham said.
“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,” he added.
One operator executive 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.
Packingham warned that consumers buying four services from one provider are going to expect a “pretty steep price discount.” So the joint venture needs to see either incremental revenue for add-on services that result from the foray, or a lessening of churn “to make this the right value proposition for our companies,” he said.