Time Warner Enters Web Phone Deal

In a move that could accelerate cable television’s charge into telephone services, Time Warner Cable, the nation’s second-largest cable provider, forged a deal with telecommunications companies Sprint Corp. and WorldCom Inc.’s MCI unit to deliver Internet-based phone service.

The deal marks the first nationwide pacts between long-distance telephone carriers and a cable television company, and allows Time Warner Cable to quickly offer “voice over Internet protocol” phone service throughout its systems without building or buying its own circuit switch network.

“This partnership with MCI and Sprint is going to allow us to roll out digital phone service much more quickly than we could have by ourselves,” Time Warner Cable Chairman and Chief Executive Glenn Britt told Reuters.

Analysts said the move would vault Time Warner to the front of the cable telephony industry.

For MCI and Sprint, the No. 2 and No. 4 U.S. long-distance phone companies, respectively, it’s an opportunity to fill their communications network with traffic and gain a new source of revenue to offset the decline in core long-distance operations.

“We do anticipate adding other cable companies in the near term,” said Paget Alves, Sprint’s president of strategic markets. “We provide the voice services that will be delivered to a Time Warner Cable customer and we’ll get the benefit of that traffic and the revenue associated for that traffic.”

Time Warner Cable, a unit of Time Warner Inc., will make the service available first in Maine, New York and North Carolina, states where it already has licenses to operate a local phone network. The company has applications pending in Kansas, Missouri, Ohio and Texas.

Time Warner shares rose 8 cents to $16.49. Sprint rose 7 cents to $15.32. Both trade on the New York Stock Exchange. Share of WorldCom, which trade over the counter, fell 10 cents to $24.60.