Cable outfits now offering wireless to compete with phone firms

Two months ago, Fred Poteet walked into a Sprint store to resolve some technical problems with his cell phone service. When he walked out, he had a new wireless contract -- with Cox Communications Inc., his cable TV operator.

"Since I already had Cox digital TV, the high-speed Internet and the telephone, they said they could bundle it all in one package," said the 62-year-old engineer from Goodyear, Ariz. "They were also giving away a free phone if I added another line. Free sounded pretty good."

Branded cell phone service is the latest attempt by cable operators to compete with -- and swipe customers from -- traditional phone companies that themselves are invading cable's turf by offering TV service. Each side wants all of the consumer's communications business and each has plans to make the technologies complement each other.

Cox is one of four top cable companies hoping to attract more customers like Poteet as they roll out mobile phone service this year with Sprint Nextel Corp. in New York. The cell service is powered entirely by Sprint, but the cable operators do their own marketing and take over the customer service.

Philadelphia-based Comcast Corp., the nation's largest cable TV operator, is expanding its cell phone service this year beyond its two test markets in Boston and Portland, Ore. while No. 2 Time Warner Cable will be launching mobile in all regional divisions by the end of the year. The Stamford, Conn., cable operator has been doing tests in Austin, Texas, and Raleigh, N.C.

In February, Atlanta-based Cox launched a mobile plan in the Phoenix area and San Diego as part of a bundle of services. It will be rolling out the service in more cities this year. The fourth partner, Advance/Newhouse Communications would only say its cable arm is testing in a few cities.

But it may be an uphill battle to get consumers to think of cable companies as cell phone providers, in part because it still doesn't have the depth of offerings available from other wireless carriers. Cable also has to overcome a reputation for higher annual price increases than the phone companies.

'It limits you'

Sam Gonzales, a 28-year-old marketing manager from Gaithersburg, Md., isn't attracted to cable cell phones because of the slim pickings.

"The only partnership they have is with Sprint," he said. "It was only four handsets they were going to offer. It limits you to a lot of things."

One sign the integration isn't easy: Customers still can't order the cell phone service through the cable operators' Web sites because of incompatibilities among all their systems.

To lure consumers, cable is not only touting the convenience of paying your communications costs on one bill and cable e-mail access, but also free calls to the cable landline phone, streaming TV shows to the handset and later, remote DVR programming and other perks.

For Poteet, an in-store demonstration by Cox caught his eye. What cemented the deal was that by paying a bit more, he got 100 additional minutes, five cell numbers instead of four, plus cable features like access to his Cox e-mail.

Cable launched the bundling trend with its triple play discounted package of video, Internet and phone service, which has stolen millions of customers from phone and satellite TV companies.

Now, it's about the quad play.

"Whatever happens with quad play is icing on the cake" for cable companies, said Greg Stevenson, an analyst with Ragen MacKenzie, a division of Wells Fargo Investments, in Seattle.

Competition is so intense that it's not unusual to see the local cable and phone companies bombard neighborhoods with direct mail advertising and phone calls. Newspaper and broadcast ads abound, with one side, notably Verizon Communications Inc., sniping directly at rivals like Comcast.

In January, Verizon unveiled a package of phone, Internet and cellular services bundled with DirecTV satellite television. AT&T Inc. has been offering quad play since 2004, but will be in a better position to offer integrated services now that the acquisition of BellSouth has given it full ownership of Cingular Wireless.

For consumers, the slugfest means that there's going to be unprecedented competition for their communications among new rivals offering essentially the same services. Whether one company or another wins could well hinge on the cell phone service.

According to a 2006 survey by research firm IDC, the cell phone has supplanted the landline phone in importance for consumers. Forty-four percent of consumers said they'd prefer using cell phones as their main home phone, all things being equal. It was the first time in the survey's decade-long history that landline phones didn't come out ahead, said Matt Davis, an IDC research director.

"We think mobility is important," said Kevin Casey, Comcast's north central division president. Comcast plans to expand its Boston tests to the entire metro area by the end of March.

Comcast officials declined to provide details about any expansion into other cities. The cable company also didn't want to disclose how the Sprint venture could play into SpectrumCo's purchase of wireless spectrum licenses in a federal auction last fall. Comcast is majority owner of SpectrumCo.

But phone companies could have an innate advantage in wireless, since it's their business.

Verizon said that in the first two weeks of offering six new bundles that include wireless, it signed up more than 90,000 people. Bundles featuring landline phone and Internet access were the most popular, followed by phone, Internet and TV or phone, Internet and wireless.

About 27 percent of bundles included a cell phone plan, said Maria Malicka, who heads the bundle programs for New York-based Verizon.

Cable's answer to phone companies: Make the cell phone interact with cable's other services, said John Garcia, president of the Sprint-Cable Joint Venture in Overland Park, Kan.

In addition to offering unlimited calling between a cable company's mobile and residential phones -- similar to a perk offered by AT&T and being tested by Verizon -- the cable cell phones can display the cable TV guide, which is designed to look like the one subscribers see at home on their TVs.

Video on demand shows, such as Comcast's video dating service, could also show up on the phones.

Garcia said mobile e-mail access will also be easier, done in just two steps, and the mailbox layout users see will be similar to what they're familiar with on their home computers. Often, current mobile e-mail offerings bear faint resemblance to the inbox seen on a computer.

In a few months, cable companies plan to offer such features as remote DVR programming.

"You can buy wireless anywhere. Most people already have wireless. So why would you buy from a cable company?" Garcia said. To grab market share, it must offer "something new to the customer."