Sprint's SpectrumCo withdrawal a smart move ÂÂÂ
Buried deep within a Time Warner Cable 10-Q filing with the Securities and Exchange Commission lies a nugget of very interesting news for the wireless industry: last quarter Sprint notified its cable partners in the SpectrumCo consortium of its intention to withdraw from the venture.
As you may recall, SpectrumCo, which consisted of Sprint and four major cable operators including Comcast, Time Warner, Cox and Brighthouse Networks, was a big winner in the advanced wireless services spectrum auctions last fall. SpectrumCo snatched up 137 licenses for $2.37 billion, achieving a near nationwide footprint of B block licenses. The licenses include such key markets as New York, Los Angeles and Chicago.
Although Sprint was part of the SpectrumCo venture, it always played a minor role probably because its equity stake was less than 5 percent. It didn't serve as a member of the bidding consortium, nor did it actively participate in the auction. In fact, Sprint always seemed far removed from the SpectrumCo activities.
After the AWS spectrum auction, I asked Sprint about SpectrumCo's plans for the licenses and the firm would only say that the licenses reflected the cable companies' strong commitment to wireless and then quickly referred me to its cable partners. In fact, Sprint has always been much more interested in talking about Pivot's progress. Pivot, of course, is the quad-play offering from Sprint, Comcast, Time Warner Cable, Cox Communications and Advance/Newhouse that gives consumers a combination of wireless, fixed, video and Internet services from one provider with one bill. Pivot uses Sprint's existing wireless network and in some ways the cable firms serve as wireless resellers because they resell Sprint's services to their cable customers and bundle it in one bill.
I suspect Sprint realized that its small equity interest in SpectrumCo wasn't enough to have any clout with the cable firms about the use of the spectrum. At one time, it was thought that the spectrum would be used to complement Sprint's existing CDMA network with advanced data services. However, that role now seems to be filled by Sprint's upcoming WiMAX network.
I think Sprint was smart to back away from the SpectrumCo partnership to focus on its Pivot cable partnership. Currently Pivot seems like little more than an integrated billing offering. But the joint venture has always hinted that Pivot could be so much more. We're still waiting to see if Pivot can produce remote DVR capability, integrated email, or clever programming tie-ins between the mobile phone and the cable TV. Sprint is smart to stay focused on making Pivot a success before it ventures into other costly liaisons with the cable industry. -Sue
P.S. You may have seen the news announced earlier this week that FiberTower Corp. will provide backhaul services in seven of Sprint's initial WiMAX launch markets. FiberTower President and CEO Michael Gallagher is one of our featured speakers at FierceMarkets' Beyond T1: Evaluating Backhaul Options conference Oct. 2 in Dallas, where he'll talk about wireless backhaul. Check out our agenda here: http://www.backhaulevent.com/viewagenda.php