Parks Associates Blog

Friday, November 02, 2007

No More Pivot for the Cable Guys

I’ve said this before, time and again, that service bundles based on arms-length partnerships never work as well as integrated offerings from a single company. There are simply too many uncertainties involved in a strategic partnership.

During Sprint’s 3rd-quarter conference call, Paul Saleh, the acting CEO, announced that the company has decided to halt further market deployments of its Pivot service, citing provisioning complexity and difficulty to simplify POS (point of sales) activation. Nevertheless, he said that Sprint is still strategically aligned with cable MSOs (whatever that means). Sprint will keep supporting the 33 markets launched so far.

Many industry executives I talked to two years ago praised Sprint’s decision to become a carrier of carriers and divest its landline assets. It seemed like a good strategic move at the time as telecom operators were bleeding landline subscribers. What a change of fortune it was. AT&T and Verizon are rebounding from their dog days, thanks to improving performances of their service bundles. Sprint, on the other hand, lost its focus for a while and was unable to stop wireless subscriber churn. Without strong performance of its bread-and-butter business, any strategic talks are just that, strategic talks. It also appears that managing relationships with business partners can be much more complex than managing consumer relationships.

Telcos must be cheering at the news as this will delay cable MSOs’ rollout of quadruple play services and give them some breathing room. I’ve said that telcos are likely to take the early lead in the quadruple play race, kind of a revenge for their loss in the triple play war. On cable MSOs’ side, they now need to investigate other options such as leveraging the AWS wireless spectrum they acquired last year or buying a wireless carrier.

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