Time Warner enters digital-phone-service business
By Don Stancavish
Bloomberg News Service
Time Warner Cable, the second-biggest U.S. cable company, said it will offer all its customers digital telephone services by linking its cable network with Sprint Corp. and WorldCom Inc. phone lines.
The Time Warner Inc. unit will sell so-called Voice over Internet Protocol phone service in its 31 markets using networks provided by the two long-distance phone companies, New York-based Time Warner said in a statement. Terms of the agreement weren't disclosed.
U.S. cable companies are selling digital phone service to boost sales with a package of services that includes cable TV and high-speed Internet access. Cable operators that haven't upgraded their systems are losing customers to satellite television providers that offer lower prices, as well as local-phone carriers that provide Web-access on their networks.
"This really intensifies the escalating battle between the local phone companies and the cable companies to get into each others' business," Jeff Kagan, an independent telecommunications analyst in Atlanta, said in an e-mail.
Local phone companies such as Verizon Communications Inc., which are losing customers to wireless phone-service providers, are partnering with satellite-TV operators to offer their own packages of phone, video and Web-access services.
"Time Warner can avoid the investment in time and money and jump right into the voice business" by partnering with Sprint and WorldCom, Kagan said.
Sprint and Ashburn, Va.-based WorldCom, which plans to change its name to MCI, will also get revenue by offering directory assistance and enhanced 911 emergency services to Time Warner customers.
WorldCom and Sprint are the second- and third-biggest long-distance providers by sales. AT&T Corp. is the largest.
"This is an entirely new and huge opportunity for Sprint, MCI and AT&T," Kagan said. "This is the kind of move that shows there is still gold in them thar hills" when it comes to long-distance companies.
Sprint and other U.S. long-distance providers are seeking new ways to boost sales as revenue from traditional calling slips. Sales at Sprint's Global Markets Group, which houses the company's long-distance business, fell 14 percent to $1.24 billion in the third quarter.
