After several failed attempts to offer a wireless play, Cox Communications announced its most ambitious wireless blueprint to date: The cable company said it plans to build its own network with the $500 million of spectrum it has accumulated, and plans to launch commercial services next year.
The company will work with Sprint Nextel Corp. to supplement its wireless ambitions through a roaming agreement and – in a nod to the current trend in wireless – will test LTE technology for possible deployment in an unspecified timeframe.
Initially, the operator plans to deploy CDMA technology in its advanced wireless services (AWS) spectrum holdings, but will also deploy on its 700 MHz assets at a later, unspecified date, said Cox spokeswoman Jill Ullman. Cox owns 12 megahertz of spectrum licenses covering 76% of its wireline footprint.
Industry speculation points to Chinese vendor Huawei as the company’s infrastructure supplier, but neither Cox nor Huawei would comment.
Cox’s decision to deploy CDMA technology likely is a nod to its previous dealings with Sprint Nextel. “The reality is, it’s probably easier to work with Sprint, so it went with CDMA,” noted Current Analysis’ Peter Jarich. “If [Cox] is launching services for tomorrow, where are all the CDMA carriers going? LTE is the direction. It’s the safer 4G network solution.”
“While we remain bullish about 4G LTE technology, in the Cox tradition we will not deploy 4G until we feel that it will enhance the Cox experience and be of benefit to our customers,” Cox’s Ullman said. “Devices are another key factor to watch and we must ensure that they will be priced reasonably.”
As the third-largest cable television company in the United States, Cox offers digital video, high-speed Internet and telephony services over its own nationwide IP network to more than 6.2 million residential and commercial customers. But the firm is under pressure to compete with AT&T Inc. and Verizon Communications Inc., both which offer telephone and wireless service as well as broadband Internet access and digital TV.
Separating from the crowd
However, Cox will need to offer more than just a quadruple play to be successful in the highly competitive wireless industry, analysts agreed.
One differentiator may be how Cox ties its cable content with its mobile service, said Gerry Purdy, an analyst with Frost & Sullivan. “Cable is not just a contributor, but a content contributor,” he said. “They have owned content and have exclusives with content providers.”
Cox said its forthcoming cellphones will include a network address book that automatically synchronizes with home PCs, and that subscribers will be able to watch TV shows, and possibly full-blown TV channels, on their handsets. In addition, there is speculation the cable company will allow subscribers to use their cellphones to program their digital video recorders, which could stand as an incentive to choose Cox service.
But Cox is probably not the only player with this idea right now, so it needs to get the service up quickly if it wants a time-to-market advantage, said Bill Ho, analyst for Current Analysis.
“It’s probably safe to say that these same features are already on the competition’s drawing boards,” Ho said. “Therefore, Cox needs to build the foundation as quickly as possible to stay in the game to acquire new customers and retain existing ones. 2009 will be Cox’s crunch year.”
But building out a network from scratch is no easy process.
The decision to build its own network is likely a “make or break” situation for Cox, said Current Analysis’ Jarich, explaining the cable operator’s likely thought process: “‘We need wireless; we think we can do it and if we do it, we need to own the network.'”
“This only leads to one direction and it leads to what they’re doing,” Jarich said. “I think it’s going to be tough.”
“A go-it-alone approach is not trivial and while competitors AT&T and Verizon have seen slow convergence progress partly due to organizational stove-piping,” Ho said, adding that it will only be a matter of time before Cox comes out with “something unique outside of a token monetary discount and single bill.”
A troubled history
Cox’s announcement is just the latest effort by a cable company to cash in on the world’s taste for wireless. Cox was a member of a joint venture that teamed with Sprint Nextel in order to resell Pivot-branded wireless services to cable users. After a year, 33 market launches and little traction, the JV folded in August.
Further, Cox, Comcast and Time Warner Cable, through a separate but related joint venture, paid $2.4 billion for 137 licenses covering almost 270 million potential customers in 2006’s (AWS) spectrum auction. And earlier this year Cox paid $305 million for 22 licenses in the Federal Communications Commission’s 700 MHz spectrum auction.
Cox is in a better position to offer wireless services this time around because it actually owns the spectrum, analysts said.
Though Cox’s Ullman declined to go into detail about pricing and packaging models, Cox’s Pat Esser made clear the company’s wireless strategy: “Wireless service will be a key driver to Cox’s future growth,” said Esser, president of Cox, in the company’s press release. “As wireless communications enters the new generation, we are uniquely positioned to deliver the entertainment and communications services our customers want, whenever, however and wherever they want them.
“Our bundled customers will become even ‘stickier’ as we offer them the best customer experience. To deliver the best customer experience, we will manage every aspect of the service, from product development to marketing and sales to back-office operations and customer support and billing.”
Interestingly, Cox has taken a significantly different strategy than its cable rivals, Comcast and Time Warner – companies Cox previously worked with under the Pivot joint venture. Comcast and Time Warner, along with a slew of others, signed up to invest in the still-to-be-finalized Sprint Nextel-Clearwire Corp. tie-up, which will deploy WiMAX technology throughout the nation. Thus, the stage is set for the cable market to join the wireless industry in the ongoing LTE-WiMAX debate.
