Sprint, Cable TV Partners Reaffirm Plans for Services
Sprint Corp. and its cable TV partners Thursday reaffirmed their plan to offer local, long-distance and wireless communications along with cable services.
Meanwhile, Sprint announced that Ronald LeMay has been named president and chief operating officer. LeMay is currently chief executive of the joint venture, Sprint Spectrum, which was formerly called Sprint Telecommunications Venture. He will remain CEO until a successor is named.
The announcements are the latest changes for the broad alliance among Sprint, Tele-Communications Inc., Comcast Corp. and Cox Communications Inc. It was formed 15 months ago to provide local, long-distance and wireless phone services and cable TV nationwide. On Thursday the alliance reasserted its commitment to that plan in response to published reports that the blueprint had been changed because of management discord.
“The partners reiterated that they remain committed to their vision,” the four said in a statement.
Earlier this month, the venture abandoned its plan to jointly provide local phone services nationwide. Instead, Sprint will try to form separate agreements with each of the cable companies. Earlier this week, the venture withdrew an application to provide local phone service in Connecticut.
Sprint shares closed down 37.5 cents at $44.25 on the New York Stock Exchange.
Sprint has also said it may resell local phone services--possibly forming agreements with the regional Bell operating companies, analysts said. That’s a far cry from Sprint’s initial plan to provide local phone services over the cable companies’ networks--a plan that could take longer and cost billions of dollars to upgrade the cable networks.
As a reseller, Sprint would buy time on local phone networks at wholesale rates, then sell it to customers at higher prices under the Sprint name. By reselling, Sprint could offer local phone service to more customers faster than if it had to wait for the cable companies to upgrade their networks, a move that could take years.
The changes in the venture come after sweeping changes in the U.S. telecommunications law with the passage of a reform bill earlier this month. The changes also show the difficulties in putting together so comprehensive an alliance among four large companies.
The law was designed to increase competition among phone and cable companies. It calls for the seven Baby Bells to open up their local phone markets and resell their services to would-be competitors such as Sprint.
Under the initial venture agreement, each cable company planned to upgrade its network to provide phone traffic, enabling the partnership to provide local service to 10 million homes by 1997. Sprint would have paid the cable partners $1.75 for each home in which they could have offered local phone service, plus 22% of the revenue from the wire-line service.
Sprint is the main shareholder of Sprint Spectrum, with a 40% stake. TCI has a 30% stake, and Comcast and Cox each have 15%.
Sprint Spectrum announced a number of other changes Thursday, including the formation of a partners committee to focus on the venture’s activities related to their ownership of Sprint Spectrum and the integration of their wire-line and wireless services. Chairmanship of the committee will rotate among the four partners. LeMay will serve as the first chairman.
LeMay, 50, will oversee Sprint’s operating units and the company’s involvement in domestic and international partnerships and alliances, including its Global One partnership with Deutsche Telekom and France Telecom, and Sprint Spectrum.
LeMay will also complete the wire-line agreements with Sprint’s cable partners and oversee the development of Sprint’s nationwide local phone operations that will be provided over the cable companies’ networks and through the resale opportunities outside the cable markets.
