RESEARCH TRIANGLE PARK — Talk about converged communications. This latest venture may be the biggest to hit the market yet.
Recently merged Sprint Nextel is investing $100 million in a joint venture with four cable TV operators to offer what the partnership is calling a “quadruple play” of communications services.
And analyst Charles Golvin of Forrester Research sees the deal as a winner.
“Partnership will outpace telcos with integrated services,” says the headline on a research paper written by Golvin about the deal.
Sprint Nextel has formed a partnership with the three largest multiple cable systems operators, or MSOs, and a fourth to offer a combination of voice, video, data and TV services.
Joining Sprint and investing $100 million of their own money are the three largest cable operators, based on the latest statistics from the National Cable & Telecommunications Association.
The fourth partner is Advance/Newhouse Communications.
News of the deal sent shares of Sprint stock up nearly 4 percent to close at $24.73 on Wednesday.
The deal will “enable these MSOs to add wireless to their stable of services,” Golvin wrote. “But this is not a typical mobile virtual network operator (MVNO) arrangement — Sprint will also sell TV, high-speed data, and fixed telephony ‘powered by’ its cable partners, just as Sprint’s brand will power the MSOs; wireless service.”
MVNOs are wireless operators that simply resell network access to other providers to be private-labeled.
The Sprint-cable deal, which had been the subject of rumors for weeks, positions Sprint and the cable operators to battle the telephone companies that are moving toward their own converged communications offerings.
‘Leapfrogging’ the Telcos
The deal establishes Sprint and its partners as “the leaders” in integrated communications, Golvin wrote. He added that the group is “leapfrogging the incumbent telcos and their wireless offspring”.
BellSouth and the other regional Bell operating companies are moving to embrace Internet Protocol TV so they can offer video services beyond what they do already with satellite TV and some broadband trials.
The Sprint partnership plans to begin offering services in 2006. And it is likely to grow. “The companies contemplate additional participation from other cable companies,” they said in a joint statement.
Combined with Sprint’s base of almost 46 million wireless customers, the partnership already has the potential to reach well over 100 million people. The four cable systems involved initially “pass” or could service some 75 million homes.
The partnership is also looking to what a “next generation” wireless phone will provide. They touted the potential of “seamlessly” interfacing between email, home and mobile voice mail, and other services.
Of the $200 million pledged to the effort, funds are being set aside for both marketing and “back office integration” to link the various networks.
The ‘Third Screen’
Gary Forsee, Sprint’s chief executive officer, sees the partnership as producing what he called a “third screen” for consumers — an offering that bridges between the computer and the TV.
“The new Sprint-cable partnership will forever transform what used to be merely a cell phone into an indispensable third screen in customers’ lives,” he said in a statement. “By giving consumers more access to information, entertainment and data from their cell phone, we will create more loyal customers and we’ll further drive our growth.
“With the convergence of technologies and capabilities accelerating, we will create personalized content, useful innovative applications and easy-to-use navigation required by consumers,” he added. “Together with our cable partners, we will have the unique content and distribution assets to realize this opportunity.”
Rick Smith is managing editor of Local Tech Wire.