Sprint to Exit SpectrumCo Venture
News of Sprint's withdrawal was buried in a 10-Q Time Warner Cable filed with the Securities and Exchange Commission (SEC) Wednesday in concert with the operator's second quarter financial results. (See TWC Ups Q2 Revenues.)
The operator said Sprint notified other members of the SpectrumCo consortium of its intention to withdraw during the second quarter. As a result, Time Warner Cable said it will contribute roughly $30 million to the venture in the third quarter to fund its share of the payment to Sprint.
Last October, SpectrumCo was deemed the winner of 137 wireless spectrum licenses for $2.37 billion. Comcast's share was $1.29 billion, followed by Time Warner Cable's $632.2 million, and Cox's $248.3 million. (See SpectrumCo Gets Licenses .)
Sprint's involvement in SpectrumCo has been limited from the get-go. It did not participate in the auction, but did serve as a member of the bidding consortium. It held a non-voting 5 percent equity stake at the time the SpectrumCo partnership was formed. Sprint's withdrawal will allow it to recoup its investment.
Sprint said it is withdrawing from the spectrum consortium so that it can focus on "primary strategic initiatives" with the cable industry, which includes the "Pivot" cellular service joint venture with Comcast, Time Warner Cable, Cox, and Bright House. Those parties announced the cellular partnership in November 2005. (See Cable Firms, Sprint in Fixed/Mobile Deal.)
"This action has been long-planned and the withdrawal from participation in SpectrumCo does not reflect a change in strategy or focus," the company said in an emailed statement. "Sprint Nextel and its cable partners remain committed to their current initiatives, including Pivot."
But that hasn't prevented speculation to swirl about the current state of Sprint's relationship with its cable partners or whether the Pivot marriage will stand the test of time. At the same time, it's questionable whether U.S. cable operators will want to spend the capital necessary to build out a national wireless infrastructure. (See Analyst: MSOs Too Wary Over Wireless.)
What's more certain is that the MSOs remain in full control of the Advanced Wireless Spectrum they purchased. Whether they will leverage that spectrum for high-speed data services or for some other application remains a mystery, as the operators involved have yet to reveal any details about its specific usage potential.
MSOs involved in SpectrumCo are "trying to understand the best use for that spectrum," said Time Warner Cable CEO Glenn Britt during Wednesday's call with reporters and analysts. "I don't have anything... to announce about that except that it's very high on our agenda to look at that."
While no MSO has shown any public interest in doing so, cable might also figure into the bidding for the 700MHz wireless broadband auctions, which will get underway by the end of January 2008. (See FCC Straddles Open Access Issue.)
In May, the National Cable & Telecommunications Association (NCTA) urged the Federal Communications Commission (FCC) to give cable operators a fair shake at that auction, rejecting concerns that MSOs might simply hoard spectrum won at auction in order to keep it out of competitors' hands. (See Cable Wants In on TV Spectrum Auction .)
— Jeff Baumgartner, Site Editor, Cable Digital News