Sprint Nextel, cable operators announce joint venture

Sprint Nextel and a consortium of cable companies yesterday announced a joint venture that will let them offer a “quad play” of integrated voice, video, data and wireless communications during the first half of next year.

Cable participants in the deal are Comcast, Time Warner Cable, Cox Communications and Advance/Newhouse Communications. However, the cable representatives are open to others in the industry joining their consortium; in particular, Charter Communications is negotiating to become a member of the consortium.

“We’re eventually going to have a national quilt,” Comcast Chairman and CEO Brian Roberts said during a press conference announcing the joint venture.

Since Sprint and Nextel announced their merger almost a year ago, industry speculation has been rampant that the new company would reach an agreement with cable companies. Doing gives cable operators a cost-effective way to enter the wireless market—something analyst believe they need to compete with bundles offered by local telecom companies like SBC Communications and Verizon Communications.

While the deal accomplishes this goal, the plan is move beyond the model of simply placing four separate services on a single bill. Instead, the services will be integrated, so customers will be able to control their cable digital video recorders and access messages–be it e-mail or voicemail–from their Sprint Power Vision EV-DO phones. Customers also will be able to watch live cable TV programming.

“We’re not just adding a plain old wireless phone to a cable service,” Time Warner Cable Chairman and CEO Glenn Britt said. “We’re tying these services together.”

In addition, the joint venture will invest $200 million—$100 million from Sprint Nextel and $100 million from the cable consortium—to fund development of new products and services.

While the joint-venture announcement was geared toward the consumer market, the capabilities enabled by the joint venture will be attractive to the business market as well, said Steve Hilton, director of small and medium business (SMB) strategies for The Yankee Group. For instance, as more companies use digital cameras for video surveillance, being able to monitor them via a mobile phone would be very attractive to them. Mobile sales-force automation tools also would be compelling, he said.

“My belief is that consumer is a first step; there are bigger things on the horizon here,” Hilton said. “I think bundling already is a huge winner in the SMB space. I think the next stage of bundling is making sure that, when we add applications into the bundle, the graphical user interfaces and the interaction that the customer has is seamless and consistent across all product offerings.”