Cable’s Phone Move ‘Bad News’ for RBOCs

From a marketing perspective, cable’s foray into the telephone business is bad news for incumbent telephone companies. Getting there is not always good news for cable operators who have to overcome technical and marketing logistics to get into an alien business, according to panelists at this week’s Cable & Telecommunications Association for Marketing (CTAM) Summit in Philadelphia. Cable’s goal, said David Pulgliese, vice president of product marketing and management for Cox Communications, is to "put phone in the past for the RBOCs." The most effective way to do that is via a quadruple play of wireline and wireless voice, high-speed data and video entertainment, said Timothy Wyllie, vice president and general manager of telephony for Rogers Cable Communications, calling "the ability to provide the quad play all on our own network …very key." Rogers came into the phone business from a different perspective than U.S. providers. It already has a thriving wireless business and on July 1 launched Rogers Home Phone, a wireline VoIP business. Within "12 to 18 months" Wyllie predicted the two services will become a seamless phone number that can be reached via wireless phone when in the wider network and VoIP in the residence. Quad-play partner Time Warner Cable, which is trialing wireless service with Sprint in Kansas City, is taking a different approach by reselling Sprint PCS to its cable subscribers. As an incentive, those subscribers get free calls between their home and wireless phones. Time Warner has about 40,000 digital phone customers in Kansas City of whom about 40 percent already had a relationship with Sprint, said Dale Fox, the MSO’s vice president of digital phone. Even so, he said, convincing subscribers to buy into a Time Warner package is a "fairly complex sale" that "takes focus" to accomplish. "We’re all still waiting for this a-ha moment" when a wireless device is tied to cable, Fox said. That device "could be a conduit for the content we have today," especially as Sprint rolls out more EV-DO (Evolution-Data Optimized) broadband wireless phones. Even so, he concluded, there is "a little bit of a ways to go to get to the final product." By partnering with Sprint, Time Warner surrenders its brand name. That’s a route Sprint would like to see other cable operators follow as well, said John Garcia, Sprint’s senior vice president of sales and distribution, suggesting that cable should just resell Sprint service and let Sprint do the heavy lifting of being a wireless carrier. "The cable industry plays a very large role participating with companies like Sprint … to be a formidable competitor" to incumbent telephone companies, Garcia said. Cable, he added, should understand that the "wireless phone is becoming the third screen" for consumers. "There’s nothing you carry with you more often … than your wireless phone." Garcia stopped well short of offering cable a branded wireless play, saying Sprint will provide back office integration, a national footprint and retail presence so cable can get into the business "without the challenges of becoming a carrier." Home-grown wireless That strategy is still being mulled—not necessarily favorably—throughout the cable industry. Instead of giving up their brands for a quick-fix wireless play, some of the industry’s bigger players are more disposed toward a model like that being offered by GCI in Alaska. Via acquisition or home-grown tactics, GCI has acquired all the pieces for a quadruple play including GCI-branded wireless resale via a "major wireless carrier we partnered with," said Richard Dowling, senior vice president of corporate development. GCI sells branded service packages, including local loop telephone, data service—dial-up – and broadband—video entertainment and wireless. "Wireless is all about bundling," he said. It’s all about hard work and a "tremendous IT challenge to rolling out the wireless product." That, in fact, seemed to be the session’s message. There are a number of variants yet to be solved before cable adds a wireless leg to its services. Even the ebullient Garcia admitted that "integrated service … is going to have to show a lot more value than what’s out there today" because connecting the wireless service and VoIP—or even television—is "a daunting challenge." -Jim Barthold