Cable Cos Get in on Quad Play, Target SMBs
One of the foreseen deficiencies that could hold cable companies back in the battle for bundled services is the lack of wireless service assets. Though they possess short-run advantages in the relative ease in building a voice business (compared with telcos’ comparative moves into video and IPTV service), this lack of wireless service the fourth dimension to the quad-play bundle has been viewed as a possible setback.
But over the past 18 months, cable companies most notably Comcast have gained ground in wireless services by joining forces with Sprint/Nextel, a strategic partner that isn’t aligned with RBOCs (as Verizon and Cingular are). The most recent development came yesterday, when Sprint Nextel announced intentions to expand joint wireless service plans with four cable partners to include 40 metropolitan areas by the end of the year. This will be a fivefold expansion of the previous joint service offered with partners Comcast, Time Warner Cable, Cox Communications and Advance/Newhouse Communications.
Most notably, it will also make a stronger push to market product bundles to small businesses and carry a new unified marketing message under the brand name Pivot. Cable companies have found success in product bundling in the consumer sector, attributing strong earnings growth to customer retention through bundled services. The Pivot joint effort now aims to gain some of the same traction in the SMB segment.
The Wall Street Journal (sub req.) reports that Comcast CEO Brian Roberts said last January that the company’s “next great business opportunity” lies in bundling Internet, voice and video to smaller companies. He also set a target of 20 percent penetration of the SMB market in five years, and added that there is “little competition in a market long dominated by local phone companies.” If it continues to add wireless service capabilities, it could well have what it takes to give telcos a run for their money.
Carrying this to its next logical step, cable companies such as Comcast can also use this position of “owning” the network across different devices to essentially add a fifth dimension to the product bundle: SMB-geared Web services and advertising. By marketing voice, data, video and wireless services to SMBs, it will be positioned to also offer Web hosting and cross-platform ad sales on the PC, mobile phone and television the “3 screen” strategy that telco competitors are talking about more and more.
Such a strategy would likely require partnerships to pull together many pieces but could be a compelling choice given the stated direction to market to SMBs and existing local assets of cable companies like Comcast.
