Cable Operators Get Mobile

Joseph Laszlo | November 02, 2005, 03:59 PM

In a totally unsurprising move, four of the largest cable operators in the US have forged an alliance with Sprint Nextel [Businessweek online] to provide jointly branded wireless services in the next few years. The deal creates a $200m JV 50% funded by Sprint and 50% by the cable alliance. It follows on the heels of an independent deal between Sprint and Cablevision to enable CVSN to add mobile to its service bundle roster earlier this year.

All this comes back to the current industry obsession with the triple (and now the quadruple) play of services: both telcos and cable operators are in love with the idea that their customers will buy wireline voice, mobile, pay TV, and broadband in a nice big bundle.

A couple of things to watch out for:

First off, aside from being a silly name (triple plays make sense, but quadruple?), very few consumers show interest in getting all four big services from one provider today. That's not to say the cable guys are wrong to go after wireless: there's definite interest in smaller bundles, particularly mobile plus home broadband. More on this topic is in Jupiter's Broadband Service Bundling report from earlier this year.

Second, cable operators will have some branding work to do remaking themselves as mobile carriers. In some ways a jointly branded service may help them on this front, though longer term I wonder if the quest to "own" the consumer might not prompt the MSOs to push for more of a completely private labelled service, rather than sharing brands with Sprint.

Finally, advanced communication and entertainment features will play a big part of the JV's wireless value. But consumers pick wireless services based on coverage and price, not features right now. Over time, other factors may become more of a decisionmaking factor, but it won't happen instantly, and will take quite a bit of marketing and educational efforts on the part of the cable guys (and others) to pull this off.