Sprint has recently courted brand name companies to join Qwest, Virgin Mobile, ESPN, and others in reselling Sprint wireless services. Major announcements are soon expected from AT&T and cable companies such as Time Warner.

But after more than a decade of effort, wireless resellers account for a single-digit share of overall wireless services. Can AT&T, cable companies, and other resellers become major forces in offering wireless services, or are they destined to little more than niche markets? The history of wireless resell is mixed at best.

It is easy to understand Sprint’s interest in offering services on a wholesale basis. Sprint receives incremental revenue while avoiding the incremental and risky cost of retail competition.

Sprint currently resells more than 2 million lines, more than other wireless carriers. And it actively seeks more. Still, in the most recent quarter, resell revenue accounted for $100 million at Sprint, only a small share of total corporate revenue.

Although some wireless resellers, such as Virgin Mobile, appear to be successful, many others are not. One of the largest efforts to resell wireless services was by MCI in the late 1990s. Despite its marketing prowess, MCI soon discovered that reselling wireless services was neither profiting the company nor satisfying its customers. MCI eventually abandoned the project

Why were MCI and many other resellers not more successful? Three reasons. Acquiring wireless customers is extraordinarily costly. Mass market advertising campaigns and contract sales arrangements through retailers such as Radio Shack and Best Buy discourage all but the heartiest competitors, of which there are many.

Second, servicing wireless customers is not the same as servicing a cable or a landline customer. Wireless customers migrate around the country and assume that their wants, complaints, and equipment support will be answered anywhere in America. Unlike many regionally oriented resellers, the national wireless carriers are well suited for these nationwide demands.

Third, even when a customer subscribes for wireless service, it is not necessarily a long-term commitment. The wireless industry has a notoriously high customer churn rate as competitors offer increasingly attractive deals.

For many years, wireless resell has sparked little interest. Why, at the beginning of 2005, do we suddenly have speculation of many major resell arrangements?

Sprint may believe that these new resell arrangements will ameliorate any potential antitrust concerns caused by its merger with Nextel. By wholesaling its services to rivals, Sprint has instant and credible competitors. Sprint is also focused on partners that will resell primarily to residential customers, who are less profitable than business customers.

AT&T, with tens of millions of local and long-distance customers, suffered a major setback this year when the D.C. Circuit court reversed FCC rules. AT&T stands to lose millions of customers. A wireless offering, even a resold one, provides an opportunity for AT&T to keep some of its customer base. Moreover, AT&T has the legal rights to market its brand, one of the most widely recognized in America.

Time Warner and other cable operators are engaged in a competition with the Regional Bell Operating Companies (RBOCs) to win the allegiance and credit cards of residential customers for telecommunications services. Currently, three of the four RBOCs (Verizon, Bell South, and SBC) offer both wireline and wireless services. In the last several months, all three have announced major plans to develop video services in direct competition with cable.

Reselling wireless services would allow Time Warner and other cable operators to offer wireless services quickly and compete on these grounds with the Bell companies. Some cable companies speak of a “Quadruple Play,” offering cable, broadband, telephone service, and wireless service.

A cable company may fancy that its customer base is a good target for a wireless service, but practically all of those customers already have a wireless plan with a rival and will only change for a better deal. Ironically, the RBOCs have not found packages of wireline and wireless services to be the primary attraction for their wireless customers.

To be successful resellers, AT&T or a cable company such as Time Warner must offer Sprint services under more favorable terms and conditions than consumers can obtain by going directly to Sprint – or to any other wireless provider. Given the competitive nature of the consumer wireless industry, that’s a very tall order indeed.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.