Time Warner Cable Inc. (TWC) decided to offer VoIP services independently as a part of its project called “Go It Alone”. The company announced that it will phase out the existing VoIP agreement with Sprint Nextel Corp. (S) over the course of next four years. Time Warner Cable entered into a long-term contract in 2003 with Sprint to outsource its VoIP offerings.
Time Warner Cable declared that phasing out of the VoIP contract with Sprint will improve the overall economics of the company by means of reducing cost overhead. As of now, Sprint Nextel supports most of Time Warner Cable’s 4.1 million digital phone customers. Time Warner Cable now decided to bring those operations in-house and will manage all phone traffic through its own digital phone network.
Termination of this deal is going to hit Sprint Nextel’s wireline customer base. Several industry researchers predicted that the company may lose approximately $250 million per annum in next few years. Time Warner Cable’s payment to Sprint will start diminishing from the second half of 2010 and may come to zero by the beginning of 2014.
Nevertheless, Time Warner Cable confirmed that its existing next-generation (4G) WiMAX agreement with Sprint Nextel owned Clearwire Corp. (CLWR) will continue. The company has decided to speed up its investment in WiMAX venture in 2010. Time Warner Cable will utilize the nationwide WiMAX network infrastructure being set up by Clearwire. Under the brand name of “Road Runner Mobile,” the company has already started offering this super-fast mobile broadband network in North Carolina and Hawaii and in Dallas and San Antonio.
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