Opportunities, Obstacles Abound in Sprint-Cable Marriage

The new partnership between wireless giant Sprint Nextel and four major cable operators will allow the companies to create new communications and entertainment services, experts say, but selling those services may be a challenge.

Sprint Nextel and its well-known cable partners may have taken a significant step forward in marrying wireless and in-home communications with their new joint venture, but experts say that much uncertainty remains when it comes to realizing the companies latest vision for the digital future.

On Wednesday, Sprint announced a deal with Comcast Corp., Time Warner Cable, Cox Communications Inc. and Advance/Newhouse Communications Inc. through which the firms established a new effort to integrate the wireless carriers services with the cable players capabilities.

The as-of-yet-unnamed effort includes a $100 million contribution for research and development from Sprint and an additional $100 million in seed funding from the four cable operators.

The companies also said they may open the effort up to additional cable providers.

Through the venture, the partners maintain they will soon be able to begin offering a so-called "quadruple play" bundle of consumer services in the United States that includes wireless calling, land-line phone service, high-speed Internet access and cable television.

But beyond the existing cross-marketing opportunities, the firms are betting on their shared ability to launch a new generation of emerging services, including delivery of video content to mobile devices and unified messaging capabilities, to create new revenue streams down the road.

/zimages/1/28571.gifClick here to read about Sprints mobile radio offerings.

"We believe that the joint venture were creating will unlock the full potential of wireless and cable by providing new and innovative services that can combine the best of our companies capabilities. Its what customers expect and have been demanding," Gary Forsee, chief executive of Sprint, said on a conference call.

"We will work together to explore how next-generation technologies can be used to create new services."

The companies said that some time in 2006 they will begin offering the quadruple play, as well as new wireless entertainment and messaging tools, and co-branded devices that integrate cable and wireless services.

However, executives said the real value of the arrangement will arrive in the future with newly developed consumer services that tap into their respective networks.

Those services could allow people to program their home entertainment systems from their mobile phones, create a single mailbox for all of their voice and e-mail accounts, or move seamlessly between different calling platforms such as wireless and VOIP (voice over IP).

The aggressive move by Sprint to partner with the cable industry comes as both camps face the threat of increased competition from companies such as SBC Communications Inc. and Verizon Communications Inc. that have access to many of the same communications and entertainment capabilities in-house, and through their respective alliances with Cingular Wireless and Verizon Wireless.

Another set of potential competitors resides in the satellite communications market.

For instance, Verizon is currently pushing to install its FiOS fiber optic network nationwide, through which it will offer broadband, TV and phone services.

/zimages/1/28571.gifRead more here about Verizons FiOS digital TV service.

While the company has yet to announce a deal to bundle those services with calling plans from Verizon Wireless, which is now owned and operated independently, many industry watchers believe that such an effort is already in the works.

Next Page: Some potential wireless applications.