Four top cable companies to offer cell phone services through Sprint Nextel

NEW YORK -- Four top cable TV providers announced a long-awaited deal to deliver their own cell phone services through Sprint Nextel Corp., creating a "quadruple play" of voice, video, Internet and wireless products for a new battle against telephone companies that are adding TV to their arsenals.

The agreement Wednesday calls for Comcast Corp.; the cable division of Time Warner Inc.; Cox Communications Inc. and Advance/Newhouse Communications Inc. to invest a combined $100 million in the new joint venture with Sprint Nextel, which also will contribute $100 million to the initiative. The funds will be used to develop a technology platform that can deliver integrated cellular and cable services.

The alliance, which took a year to negotiate, could soon be expanded to include other cable companies. The companies said talks are already underway with Charter Communications Inc. and Mediacom Communications Corp. as well as smaller providers in more rural markets

"We will extend the same opportunity on the same terms to others," said Comcast chief executive Brian Roberts.

The 5 million cable subscribers served by Adelphia Communications Corp. are slated to become customers of Time Warner and Comcast after scandal-marred Adelphia emerges from bankruptcy, expanding the potential audience served by the initial partners to 46 million.

The deal envisions a launch by mid-2006 of cell phones with advanced capabilities such as wireless access live cable channels and programs stored on digital video recorder at home, as well as the ability to program a DVR remotely. The mobile phones would also feature single-screen access to e-mail and voice mail from a customer's home and wireless numbers.

"Each company can pursue this opportunity in different ways," using the common platform to offer different features, Roberts said.

The products will be co-branded by Sprint and the cable company serving the market where the customer resides. Prices for the cellular services will vary by market, determined by an individual agreement between Sprint Nextel and that particular cable company.

"It's a complicated deal with a lot of moving parts, which is why you hadn't seen any announcements," said Jorge Fuenzalida, a director for the the industry consulting firm inCode.

Each cable company will provide customer service for cell subscribers within its territory and bundle the charges for wireless on a single bill -- considered a key selling point for consumers.

The move into wireless by the cable companies follows a major push into residential phone service, another effort to protect their turf from a coming invasion into cable TV by the nation's two largest telephone companies, Verizon Communications Inc. and SBC Communications Inc.

Verizon and SBC are spending billions to upgrade their copper networks with fiber-optic cables. Last month, Verizon launched its first television service in the Dallas suburb of Keller. SBC plans to begin rolling out video next year.

Sprint Nextel, unlike most of its cellular rivals, has built a large business selling wholesale wireless capacity to other companies wanting to introduce their own competing cell brands, the most prominent being the new mobile phone services being launched by ESPN and its parent The Walt Disney Co.

About 4.6 million of the 42.5 million customers served by the Sprint and Nextel cell networks subscribe to one of these "MVNO's," short for mobile virtual network operator. These include Virgin Mobile and Qwest Communications International Inc., among others.

But with tens of millions of video subscribers in the cable industry, Wednesday's deal would mark the biggest such initiative for Sprint. However, Sprint and its cable partners stressed that their arrangement was unlike an MVNO since all the participants were taking an economic stake in the venture.

Sprint CEO Gary Forsee stressed that the goal was "about more than stapling wireless onto the triple play" of cable, Internet and phone service. "This is about making the technologies work together to allow a device to emulate what consumers are seeing in their homes (on TV and the Internet). It's about making the phone a third screen."

Another notable aspect of the Sprint-cable deal is a plan by the five companies to explore developing new services using new wireless technologies that can cover a far wider area than cellular signals. Sprint Nextel is a major holder of licenses to use the radio spectrum that can deliver the longer range signals.

News of the deal appeared to boost the stocks of the publicly traded companies involved. Time Warner rose 33 cents, or 1.9 percent, to $17.90 in Wednesday's trading on the New York Stock Exchange. Sprint Nextel rose 88 cents, or 3.7 percent, to $24.73 on the NYSE. Comcast's Class A shares rose 70 cents, or 2.5 percent, to $28.80 on the Nasdaq Stock Market. Cox and Advance/Newhouse are privately held.