Sprint, Mediacom in venture
No. 8 cable company to offer phone service to 1.6 million customers.
August 25, 2004: 7:58 AM EDT
WASHINGTON (Reuters) - Sprint Corp. and cable company Mediacom Communications Corp. said Wednesday they have struck a deal to sell a Sprint-backed phone service to Mediacom's 1.6 million customers.
The deal will allow Mediacom (MCCC: Research, Estimates), the No. 8 U.S. cable company, to compete head-to-head against the dominant local phone carriers that have begun reselling satellite television service in its 23 states.
It's the third such deal Sprint (FON: Research, Estimates) has announced with a cable company, part of a strategy to wholesale its services to challenge the Baby Bells and increase the usage of its own network. Sprint executives said they had seen strong interest from cable firms.
"We have probably talked to 90 percent of the top 50 (cable) companies, and have ongoing discussions with many of those," said Mike Smith, Sprint's director of business development solutions.
Under the multiyear deal, Sprint will provide most of the technical services, such as acquiring phone numbers and routing calls. Mediacom will begin offering the service to its customers early next year.
While the service will be similar to other Internet-based phone services, Sprint said rather than using the public Internet, it would keep the data traffic on its own network for higher quality calls. The two companies will also consider reselling Sprint's wireless service to Mediacom customers.
In addition to Mediacom, Sprint provides phone services to Time Warner Cable, the nation's No. 2 cable operator, which plans to offer phone service to all its 10.9 million customers by year's end. Time Warner Cable, like CNN/Money, is a unit of Time Warner Inc. (TWX: Research, Estimates)
Sprint also has an agreement with a small Nebraska cable firm. It also has an unknown number of deals with cable companies that it has not disclosed.
Cable companies have begun launching voice services just as the Bells have moved into video, reselling satellite TV and building their own video networks. Both industries expect a growing number of consumers over the next few years to buy a bundle of voice, video and high-speed data services from one company.
"The opportunity to offer a voice component to our existing bundle is just compelling from a business perspective," said Calvin Craib, Mediacom's senior vice president of business development.
Mediacom executives said the service would be priced at about $40 per month for unlimited calling plans similar to those offered by other Internet phone services.
AT&T Corp. (T: Research, Estimates) has also said it wants to partner with cable firms to sell voice services, and has agreed to recommend cable broadband to customers of its CallVantage phone service. |
