Time Warner Speaks of Mobility Trial

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Philadelphia — The Time Warner Cable folks in Kansas City are doing a lot of learning about wireless phones these days, and last week they shared some of that knowledge.

Time Warner executives provided an update on the wireless phone trial with Sprint Corp. in the Kansas City market at the Cable & Telecommunications Association for Marketing Summit, detailing some of the hurdles cable faces in providing wireless phone service.

Bottom line: the trial is a work in progress.

The division counts 40,000 digital phone subscribers, said Dale Fox, vice president of digital phone for Time Warner Cable Kansas City. Several months ago, it launched Sprint PCS phone alongside its own Digital Phone product, offering subscribers a chance to complete a quadruple play with wireless.

SOME CALLS FREE

Time Warner offers several rate plans, but all include free calling between Sprint PCS and Time Warner digital phones.

The first hurdle Time Warner faced was already hefty wireless penetration. About 40% of Time Warner's digital phone subscribers already had Sprint as a wireless carrier, so the MSO stayed away from marketing to those subscribers.

“We needed to target segments in emerging markets,” Fox said, like tweens or the prepaid phone-card market.

Time Warner Cable has found that many of the best wireless customers are already taken, so credit checks are becoming a big issue among the market segment that doesn't yet have a cell phone.

Additionally, “it's a fairly complex sales process,” said Fox. “Wireless tends to move to the end of the sales process. It takes time to explain. One answer may be the bundle.”

AWAITING 'AHA' MOMENT

Fox said Time Warner Cable is still waiting for that “aha” moment that defines cable's role in wireless. The mobile device could be a conduit for the MSO's current content, he said.

Time Warner Cable has begun experimenting with video downloads of local high school sports content and NASCAR video on advanced video-capable Sprint cell phones.

“We're looking at ways to access Road Runner, and maybe DVR control from your cell phone,” he said. Looney Tunes and Cable News Network content is on the way. “And we're debating the market for local news, weather and sports,” he said.

Sprint's next-generation Evolution Data Only (EVDO) platform and phones, which will roll out next year, will allow better video quality on phones.

“There is a big difference between [the current] 15 frames per second and EVDO,” he said.

“Are people looking for 15% to 20% discounts?” he asked rhetorically. That might enticing to consumers, he said, but “I'm not sure that's a good business model.”

“Are they looking for mobisodes?” These are answers Time Warner Cable is trying to get at, he said.

“It's coming, but it's not quite here yet,” said Fox. “These are value-added, but I'm not sure they are the end point. We have a little ways to go to get to final product.”

Sprint senior vice president of sales and distribution John Garcia made a pitch for more cable operators to use his company as a wireless partner.

Sprint is splitting into two companies after its merger with Nextel Corp., spinning off its local phone division. Garcia said wireline phone companies are finding anywhere from 8% to 12% of subscribers have completely gone wireless, and 18% to 22% use wireless as their primary phone, relegating the wireline phone to a fax machine or secondary purpose.

“Now is the time for the cable industry to strap on the gloves,” he said. “We think the cable industry plays a large role in driving this change. It allows cable to be a viable competitor.”

$6 IN DATA MONTHLY

Cable can leverage its content and broadband plant, he said. Sprint generates $6 a month in data revenue, and that figure is growing.

“Customers want a third screen experience,” he said. “They want everything on TV accessible on their phone.”

Garcia warned cable operators will face issues entering the wireless business, but they can be addressed.

“Technology fears can be overcome with a good interface,” he said. “Different customer needs can be met with segmentation. Bundling isn't enough. It's about integration that's easy to use.”

He also said wireless customers don't want to be bound. “To make it compelling, it has to be national. It's got to work the same way everywhere. There needs to be standards across the board.”

He added:“Sprint and cable have many complementary assets. We have a common competitor. There are compelling reasons to find a win-win.”

Garcia also said wireless marketing spending has shifted from acquisition to retention.

“We're seeing a dramatic drop in churn rates,” he said. “Features are being enhanced. It's a higher challenge to switch phone users. You're going to have to show lot more value than there is out there today.”

In many cases, it's not just about switching out one phone, he said, but all the phones in an entire house that likely has a family share plan.

The mobile video space is beckoning programmers and operators, said panelists at a separate CTAM session. “We consider mobile media integral to our strategy,” said The Weather Channel Cos. president Debora Wilson. “It's a profitable business for us.”

TWC content is a natural for mobile devices, and the company began operating in the space 10 years ago, Wilson said.

“We have a separate business unit for mobile and we're producing content unique for the platform. That's a really important thing to do.”

Wilson said mobility is more complicated than cable, because with multiple carriers, multiple types of partners and different applications, “we're literally programming hundreds of different applications.… With cable, it's one raw cast.”

Dr. Phillip Alvelda, chairman and CEO of Idetic Inc., said live TV and video content have enlivened the wireless-phone business. Idetic built an infrastructure platform that became the basis for MobiTV, the video cell phone subscription business available on Sprint, AT&T Wireless and Cingular Wireless handsets.

Next year, Alvelda said, all cell phones sold in the U.S. will be video capable. “The demand is awesome.”

NOT IF: HOW AND WHEN

MSOs are looking long and hard at the space. “The real issue is not if, but how and when we create strategies with mobility,” said Advance/Newhouse Communications vice president of strategic alliances Arthur Orduna.

Subscribers will look to MSOs to bridge content and devices, he said. “That leads us to how we develop an environment to encourage innovation. We have to be looking at new angles on programming relationships. We have to be committed to figuring out what those next steps are. We provide video, voice and data across a wire and it's tethered.

“Tomorrow, those same sets of services have to be untethered. The question is how do we get there?”

Cable companies, for instance, might offer consumers storage services for all the content they are creating whether its video or photos.

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