Sprint Nextel Corporation, Time Warner Cable, Cox Communications and Advance/Newhouse Communications today announced they will form a joint venture that will accelerate the convergence of video entertainment, wireline and wireless data and communications products and services to the approximately 41 million customers currently served by four of the country's largest cable companies as well as to Sprint's nearly 46 million wireless subscribers. The venture has the potential to serve approximately 75 million homes currently passed by the cable companies.
The companies in the joint venture will work to develop converged next generation products for consumers that combine the best of cable's core products and interactive features with the vast potential of wireless technology to deliver services anywhere, any time. Leveraging the expertise, technical leadership and customer focus of Sprint and four of the largest, most successful cable and broadband communications companies will provide millions of customers access to the most advanced integrated entertainment, communications and wireless products available anywhere in the United States.
Terms of the Agreement
The joint venture, which is mutually exclusive for three years and has a 20-year term, calls for a combined initial financial commitment of $200 million, $100 million of which will be committed by Sprint and $100 million of which will be committed collectively by the cable companies. The investment is expected to be used to fund the development of the converged services, national marketing initiatives and back office integration. The companies contemplate additional participation from other cable companies.
Beginning in 2006, the companies in the joint venture plan to:
*Offer consumers access to the expanded four element bundle, or "Quadruple Play," or any combination of services including video, wireless voice and data services, high speed Internet and cable phone service
*Serve growing consumer demand for a wireless "third screen" beyond the TV and computer screens
*Develop and introduce new co-branded wireless devices that will provide new and unique features that integrate cable and wireless services all on a single device
*Sell and market these co-branded products and services to customers through a combination of 1,600 Sprint retail stores, cable retail outlets and other third-party distributors, including thousands of RadioShack stores
Unlike MVNO (mobile virtual network operator) or other wholesale relationships, the companies participating in this joint venture will retain full economic benefits of the acquired customers, similar to what they currently enjoy through their direct retail channels.
Next generation wireless products and services
The next generation wireless phone will be designed to connect customers of Comcast, Time Warner Cable, Cox and Advance/Newhouse Communications to Sprint through Sprint's nationwide high-speed Power Vision(TM) EV-DO (Evolution Data Optimized) network and integrate products from each cable company. Customers using the converged services will be able to seamlessly interface between email, home and mobile voicemail, Digital Video Recorders (DVRs) and photo programs.
The parties plan to implement and sell Power Vision(TM) EV-DO-enabled handsets and service packages that will enable customers to:
*Use interactive features like remotely programming their home DVRs
*Have a single voice mailbox that serves both the home and the wireless phone
*Access innovative new calling plans which allow for unlimited calls between the home and the wireless device
*Surf the Internet using their cable Internet portal
*Send and receive e-mail from their cable high-speed Internet account
*Access unique content like streaming television programming, music, video clips, games and pre-recorded DVR programs
In addition, the five companies have agreed to work together to explore potential next generation wireless technology business plans for new services that could be provided using Sprint's Broadband Radio Spectrum (2.5 GHz), with the goal of further integrating wireline and wireless services. This spectrum has the capability to provide high-speed data connectivity that can help deliver an even wider and richer array of entertainment and communications services.
In each market, the price of the integrated offering will be agreed to by Sprint and the cable company serving that market. Each cable company will be responsible for billing customers and for customer service in its territory for the converged offering. Customers can enjoy the convenience of a single bill for all of their services, including video, data, phone and wireless.
Gary Forsee, president and CEO of Sprint Nextel said, "The new Sprint-cable partnerships will forever transform what used to be merely a cell phone into an indispensable third screen in customers' lives. 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-understand navigation required by consumers. Together with our cable partners, we will have the unique content and distribution assets to realize this opportunity."