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MSOs Pivoting Away From Sprint JV

Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Cox Communications Inc. have confirmed they are severing ties to "Pivot," the wireless joint venture with Sprint Corp. (NYSE: S) and one other cable operator -- Bright House Networks .

DSL Reports disclosed the Comcast portion of the news Wednesday morning, citing an "internal Comcast announcement." Pivot, in case you've forgotten, is the brand name the MSOs are using for a service that amounts to a resell of the Sprint wireless service, plus some other cable-supplied features, including a mobile video service and Web and email account access.

Comcast spokeswoman Jennifer Khoury said the MSO and Sprint mutually agreed to discontinue the Pivot product, citing operational and other intercompany complexities. Comcast stopped offering Pivot on Tuesday and expects to begin notifying customers of the situation on Friday (April 25). Cox has started to notify some Pivot customers of the change, according to spokeswoman Jill Ullman.

The Pivot features were "operationally complex, and [the Pivot service] wasn't a scalable national solution for our wireless offering," Khoury explained.

And that's not a big shock. Last November, Sprint disclosed that the Pivot expansion had been halted in about 33 markets, citing mounting "provisioning issues" and other complexities that made it difficult to sell. (See Sprint Halts 'Pivot' Expansion.)

"It was tough for the Sprint folks to sell, and for us to service," Time Warner Cable spokesman Alex Dudley said.

Comcast offered Pivot in its New England and Portland, Ore., markets. The MSO launched Pivot in late 2007, but halted marketing efforts by the third quarter of 2007. Khoury said Comcast expects to complete the migration sometime this summer.

Cox offers Pivot in five markets: Oklahoma, New England, Arizona, Northern Virginia, and San Diego. The company hopes to complete the transition by late August or early September, Ullman said.

MSOs involved in the J.V. have not disclosed how many Pivot customers have signed up.

"We're not expecting a big uproar," Time Warner Cable's Dudley said.

Following the separation, the billing and customer care for Pivot subs will transition to Sprint and will be given a free month of service. Those subs can also terminate service without getting hit with any fees.

For those who decide to stay with Sprint, much, including the expiration date of the original service contract, will remain the same. Subs, for example, will be able to retain their phone number and continue to use the same handset and accessories. However, they will be migrated to Sprint's mobile video and email application platform.

What's next?
Although the Pivot J.V. clearly wasn't the answer to Comcast's mobile services question, the MSO's future wireless plans remain hazy.

"We're still exploring our wireless options," Khoury said.

One of those options could involve the Advanced Wireless Services (AWS) spectrum Comcast, Cox, Time Warner Cable, and Advance/Newhouse (Bright House's parent company) obtained via the SpectrumCO LLC venture. (See SpectrumCo Gets Licenses .)

In December, Comcast cited those holdings as a reason why it opted to stay on the sidelines during the 700 MHz auction. (See Comcast Won't Bid on 700MHz .) The GigaOM blog reported today that Comcast is creating its own wireless unit and has hired former Telefonica O2 Europe chief technology officer Dave Williams to serve in the same capacity.

Comcast is also one of the MSOs linked to a recent rumor that it would help foot the bill for a major WiMax rollout with Sprint and Clearwire LLC (Nasdaq: CLWR). But nothing has materialized in terms of a renewed Clearwire-Sprint hookup or a grander funding relationship with Comcast, Google (Nasdaq: GOOG), and other parties. (See Analyst: WiMax Might Scratch Cable's Wireless Itch, Why Not WiMax?, and Cable Still Not in the XOHM.)

Cox also has a stake in SpectrumCO, and, more recently, won some 700 MHz spectrum. (See The Great Cable Spectrum Speculation and Cox Waxes Wireless .) But the company has not outlined its wireless strategy post-Pivot.

"Cox is committed to wireless," Ullman said. "We'll bring a wireless component to our bundle of services."

What of Bright House?
Considering the situation with the other partners, it's not farfetched to believe that Bright House is dropping out as well. A Bright House spokeswoman declined to comment on the status of the MSO's involvement with Pivot.

Even if Pivot dissolved completely, analysts don't think it will have much of an effect on the MSOs and their wireless ambitions.

"We're sure both of Pivot's customers are going to be desperately disappointed," joked Sanford C. Bernstein & Co. Inc. analyst Craig Moffett. More seriously, he said Comcast's exit raises serious questions about whether the rumored WiMax involvement will ever happen.

"It's hard to see Comcast shutting down its [Pivot] partnership with Sprint with its left hand while it's starting a new one with its right." he said.

News that the Pivot J.V. appears to be dissolving "isn't terribly surprising," said Heavy Reading senior analyst Alan Breznick. "Besides, these MSO partnerships with players outside the cable industry, particularly Sprint, never seem to last very long," he said. "Even the MSO partnerships within the industry, like @Home Network and PrimeStar Partners, usually end up falling apart. It's just very tough when each company has its own competing interests."

Sprint, meanwhile, insisted that its ties to cable remain strong. "We do have a good relationship with all of our cable partners, and we are continuing to discuss different alternative business structures to help them bring wireless to their cable customers," a Sprint spokeswoman said.

Even if the Pivot partnership disappears completely, Sprint still has VOIP wireless service and backhaul relationships with operators such as Time Warner Cable and Suddenlink Communications .

― Jeff Baumgartner, Site Editor, Cable Digital News

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