John Garcia, Sprint Nextel
The executive discusses the firm's joint venture with cable companies and video's future on the wireless platform.First announced in November, the partnership between wireless company Sprint Nextel and four cable companies including Comcast and Time Warner Cable will bundle phone, cellular, Internet and TV services in several test markets this year. John Garcia, president of the joint venture, spoke with The Hollywood Reporter television features editor Andrew Wallenstein about taking on the telco giants and video's future on the wireless platform.
The Hollywood Reporter: What can you say at this point about what this new quadruple play service will look like?
John Garcia: Pilot markets we will launch later this year in Boston, Raleigh, Portland, Ore. Several others as well. We are building foundational elements to the service of the future. The very first thing we want to do is build some reliability on our system. Hooking up all these computers and building systems is quite a task. In our first markets, we want to move content and bills and customer information around. We'll begin testing a few features that will give us a sense of how customers feel about these services. High-speed Internet will come with e-mail, like Roadrunner from Time Warner, for example. You can see that e-mail service on your phone and take it with you. The portal service from your cable company will look similar on the phone, too. And there's a single voice mailbox for (both) the landline provided from cable company and (the cell phone) from Sprint wireless.
THR: What do the cable operators bring to the table in this joint venture?
Garcia: The cable companies have contracts for certain things that can be done. They don't have wireless licensing rights yet. You'll see them add wireless licensing to their agreements so that what you can buy from your cable company will be available on phones. Many of the cable companies already own local content. You'll see some of that on new phones.
You'll see a new level of content on phones. We're just in the early stages of that. We're learning how to move video around, how to transcode it for a small screen. There's lots of technology there, so we'll be learning and solidifying ways to do that, testing what customers appreciate, what they can use. There will also be some price-type of initiatives that make sense for the customer.
THR: Will content applications be constrained by the content companies?
Garcia: Another high priority for us is how we can protect the content owners' rights as we do this. There's a lot of things that have challenged fair use of content. There's a lot of challenges with content owners and how far those rights extend. We think creating a closed system with the wireless system and cable system, we can do a better job than most at protecting artists' rights and content rights.
THR: What options do you have in terms of the different ways subscribers can get wireless content?
Garcia: You'll see us very focused on understanding consumer behavior, a lot of types of experimentation. Building ways to protect licensing rights and to find ways to make it more consumable for customers, like user interfaces, which are a big deal. If you've watched video today on cell phones, it's a user-interface nightmare. To get consumers to do something, we make customers work too hard at it. There's thoughts that phones could have music sideloaded onto them from the computer or over the air or with movies if you had rights to that. If you paid for something on your DVR, you can put it on your phone. These are all possibilities.
THR: What sense do you have of consumer preferences in terms of video over wireless?
Garcia: What do customers want to do away from home with their entertainment? Do they want to see things live as they happen? For some, maybe. For more people, it depends on the content, if it's news, if it's sports. But we think VOD plays a much larger role. We think summarized content plays a larger role. So within the joint venture, one of the biggest priorities is to do some experimentation and learn very quickly with this new capability. We've taken the entire concept of controlling entertainment a bit further.
THR: What kind of pricing structure are you thinking about for video content?
Garcia: There's a lot of different ways people are talking about having video consumed by customers, whether by Internet or iPod or on wireless systems. It has to do with charging an incremental amount of money, transactional revenue. All of those business cases make sense on their own. But when the consumer adds it up, you can spend $25 to watch 'The Sopranos' on all the different ways they can view it. We're not sure the consumer wants to watch it that way. If they're paying the cable company customer for a piece of content and being able to view that in a variety of mediums, that may make more sense for the customer. We hope to work with content owners and artists to find a way that makes sense to protect those licensing rights with a way they can also measure usage so we can know what's going on.
THR: Who has the edge in this competition with the telcos?
Garcia: I think there are advantages on both sides. They've done the research we've done. It all says customers want something like this. They want their entertainment and communication services to make more sense of them. The cable companies have a big pipe to your house already, and they know the entertainment industry already. What the telephone companies will have is, when they have their higher-speed fiber network and once they learn the programming industry, they can do this all as one company. The challenge for us is to do this as separate companies in a joint venture.
THR: How has Sprint's relationship been with its cable partners?
Garcia: Cable companies are learning about wireless; Sprint is learning about the cable industry. Coming from the wireless industry myself for the past 20 years, I underestimated how complex the entertainment industry is, how complex licensing rights are, the complexity of the technology to do a lot of these things. The cable companies have been pleasantly surprised by the capabilities of wireless technology to date from a full-motion video standpoint, from a video compression standpoint. We've had the opportunity to learn from each other, to build competence and trust.