Cable Seeks Quad-Play With Wireless
Heavy Lifting Analyst Notes Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation 11/6/2008
It would certainly seem that wireless services are growing in importance for consumers. According to The Nielsen Co. , 17.1 percent of U.S. households had cut the cord by June 2008, meaning that they no longer had wireline phone service at home. And wireless phones are increasingly being used for interactive and multimedia applications, with 15.6 percent of U.S. subscribers actively using the mobile Internet.
However, cable operators have been unable to develop a competitive wireless strategy. They shut down Pivot, the cable-Sprint Corp. (NYSE: S) joint venture, earlier this year, giving Verizon and AT&T a potentially valuable bundling advantage.
Cox will be working with Sprint and offering mobile services as early as next year. It has broken from the other major U.S. MSOs in deciding to build its own 3G cellular network – and trial Long-Term Evolution (LTE). Other MSOs, such as Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Bright House Networks have instead invested $1.7 billion in the mobile WiMax joint venture between Clearwire LLC (Nasdaq: CLWR) and Sprint.
Cox was the first MSO to embrace cable telephony about a decade ago, and the first to really validate the benefits of the triple-play bundle. Bundling is central to Cox's story, so it's not surprising that the MSO is keen to retain control of the wireless product, and get it out to market quickly.
Cox's move does emphasize the importance of the quad-play for service providers, be they cable operators or telcos. In particular, the MSOs' experience with content positions them well to drive mobile multimedia usage, which might give them an edge in their battle with telcos. Video consumption is now one of the top 10 activities of mobile Web users, with 9 million viewing video on their mobile devices in May 2008.
Earlier this year, a Heavy Reading survey of 120 service providers found that more than 90 percent felt that video distribution across device platforms would be critical for their success in the next five years.
And what did they see as the primary driver for deployment? Competition.
— Aditya Kishore, Senior Analyst, Heavy Reading