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Forget the triple play--wireless ups the ante

This could be the year of the quadruple bundle, as cable and phone companies integrate mobile wireless services into service packages.

If 2006 was the year of the triple play, 2007 may very well be the year of the quadruple bundle as cable operators and phone companies start to integrate mobile wireless services into their service packages.

Even though AT&T will soon own all of Cingular Wireless, and Verizon Communications owns a significant stake in Verizon Wireless, the cable industry seems to be taking an early lead in actually integrating the services and rolling them out to customers.

"Depending on how well mobile services are received by cable customers, it could up the ante in the battle between cable and phone companies," said Jim Penhune, an analyst with Strategy Analytics. "It will force the phone companies to readdress the market and get more serious about integrating their own wireless services into their offering."

Starting this year, all four of the cable operators involved in a joint venture with wireless carrier Sprint Nextel will launch their integrated mobile phone service. Comcast and Time Warner, which have already announced public pilot programs, are expected to expand their service in 2007. And Cox Communications and Advanced Newhouse also are expected to begin offering the service in 2007.

For cable operators, adding wireless to their bundle, which already includes high-speed Internet access, telephony and video services, means more than just providing customers with a single bill and a discount for buying more than one service. These companies see mobility as a way to add more convenience and value to services they already subscribe to.

"There is no question that wireless ties all of our services together," said Tom Nagel, senior vice president and general manager of wireless services at Comcast. "The idea is you can take the services you enjoy at home with you when you're on the go using a mobile device."

In the initial launch Comcast, Advanced Newhouse, Time Warner and Cox will allow customers to access their e-mail, cable TV guide and home voice mail from their cell phones. They'll offer some video content on their phones that would otherwise be available only at home. Eventually, the cable companies want to allow customers to be able to do things like program their DVRs remotely from their handsets.

Still early in development
But the companies admit that they are still in the early stages of developing these services. This past year, they've focused mainly on logistics, such as offering customers a single bill that details charges for all their services, including, broadband, voice, TV and wireless. They've also been training sales and support staff to handle the new wireless service. And they've worked on getting the basics of the service in place, such as simplifying the user interfaces so that customers can easily navigate the services and so that those services feel familiar and comfortable to customers.

This means that when customers access their e-mail or view the cable TV guide on their phone, the interface on the phone will be similar to what they see on the PC screen or on their TV at home. The voice mail service doesn't provide a single mailbox, but it offers the home voice mail mailbox as an option in the menu when checking for wireless voice mail messages.

"We know customers aren't begging for a bundled bill," said John Garcia, president of the Sprint-Cable Joint Venture. "And they don't necessarily want a new service. What they really want is for the services they already have to work together."

While they may not be as far along as the cable operators and Sprint in developing an integrated wireless service, the phone companies made it clear during the past several months that they will add wireless services to their bundles. During the second half of 2006, Verizon began offering a voice-services bundle that allowed people to talk for free between their cell phones and their Verizon home phones. It also provides a single voice mailbox. But the service is limited to certain customers in Texas and Florida. And it doesn't yet integrate any of the broadband or TV services the company is offering.

But that could change in 2007. Verizon and Verizon Wireless, which is jointly owned by Verizon Communications and European carrier Vodafone, are queued up for a big announcement at this year's Consumer Electronics Show, which begins this weekend in Las Vegas. Some believe the companies may announce plans to integrate video services from Verizon's Fios TV service with Verizon Wireless's V Cast service that delivers video. A Verizon representative confirmed a scheduled press conference, but declined to comment on the nature of the announcement.

AT&T is also gearing up to do more with its wireless service. Now that the megamerger with BellSouth has cleared the final regulatory hurdle, the companies will soon close a deal valued at roughly $86 billion. In addition to creating the largest phone company in the country, the marriage with BellSouth also gives AT&T complete control over Cingular Wireless, the largest mobile phone operator in the country.

AT&T has already stated publicly that it plans to sell the AT&T-branded wireless services in packages to its corporate phone and Internet customers. The company will also package wireless with its other services for consumers.

But Sprint and the cable companies still believe they have a leg up on the competition.

"Clearly AT&T, with its full possession of Cingular, will have some advantages in how easily they can integrate certain services," Sprint-Nextel's Garcia said. "But the advantage we have is that our partners have been in the video business for a very long time, whereas AT&T is just starting."

Indeed, AT&T and Verizon have been moving relatively slowly in their deployment of TV services compared with how quickly the cable operators have been able to penetrate the telephony market. AT&T is only just now starting to offer its service in 11 markets. And in those markets, the deployment is still very controlled.

"In principal, AT&T with its IPTV service should be able to deliver video over different mediums," said analyst Penhune. "But realistically, the technology is still new. And they are probably more concerned with getting it to work and scale before they can think about integrating video with wireless services."

Even Verizon, which is using technology similar to that of traditional cable cable networks to deliver Fios TV, is nowhere near reaching the penetration rates of the cable industry. The company said in 2006 that it planned to have more than 175,000 subscribers signed up for the service by the end of the year.

While new quadruple play services may be introduced in 2007, it's unlikely that consumers will see huge discounts from either cable operators or phone companies. For example, Comcast, which is piloting the service in Boston and Portland, Maine, is offering the basic wireless service for $33 a month when customers buy it as part of a package that also includes broadband, voice and TV service. (Each of these services also starts at $33 a month.)

The basic wireless service offers 200 minutes, 300 SMS text messages, free long-distance calling and voice mail access, Comcast's Tom Nagel said. But at $33 a month, it's not much cheaper than existing wireless services. What is more, in order to get access to the more advanced integrated features such as access to Comcast's e-mail client or the TV guide, users have to pay an additional $15 a month for a data package. And if consumers pay $25 a month, they can get Internet access with e-mail and access to the TV guide, as well as access to certain video content.

Verizon's wireless/home phone package, called Verizon Complete Freedom, is also pricey. In Texas, the service starts at $99.94 a month for both home and wireless services, according to the press release. Even though Fios TV is not integrated into the service, Verizon will sell it as part of a package. The press release indicates that customers can get wireline calling, wireless, Internet and entertainment video services for as little as $160.92 per month. The bundle includes either Verizon Online DSL or Verizon Fios Internet service, where available, and either DirecTV satellite service or Fios TV, where available.