October 27, 2008

Cox Cable Plans To Launch Wireless Service

The intense competition between cable and phone companies continues as cable TV provider Cox Communications Inc. was set to announce Monday that it plans to have its own cellular network up and running next year.

Cox spent $550 million on licenses to use the airwaves, signaling its interest in building a wireless network. But the privately held Cox hasn't previously detailed its plans.

The company would build its own network in its cable service area, and partner with Sprint Nextel Corp. (S) for roaming outside those areas.

Stephen Bye, Cox's vice president of wireless, said spectrum licenses for Cox cover the areas around Atlanta, New Orleans, San Diego, Omaha, Neb., and Las Vegas as well as much of Kansas and southern New Mexico. Those areas have about 23 million people.

Cox's wireless phone service will add to its video, phone and Internet services to head off competition from phone companies like AT&T Inc. and Verizon Communications Inc., which already have wireless service and are rolling out video.

Cox, which has 6 million customers, appears to be the only major cable company that is building its own cellular network right now, but it's an area where the cable industry has long been involved.

In the 1990s, Cox built and operated a cellular network covering Southern California and Las Vegas, then sold it to Sprint in 1999. Comcast Corp., the country's largest cable company, also owned a wireless network in the '90s and had ties to Sprint.

Both cable companies partnered with Sprint again in 2005 to market wireless service to their video customers, but the project was scuttled this year.

The latest project with Sprint taught Cox that it was important to provide a consistent experience for customers, and that the best way to do that was to keep control under one roof rather than share it in a joint venture, Bye said.

"Cox probably did the right thing to get out of wireless in the '90s to focus on upgrading its cable network with optical fiber that carries broadband and wired phone service," said Forrester Research analyst Charles Golvin.

Cox can now take advantage of that fiber by building a new wireless network now. Wireless carriers need the fiber-based data connections to their cellular towers to handle higher wireless data speeds used by smart phones like the iPhone and wireless laptop cards.

Golvin said even though Cox can use its dense fiber network for its cell towers, the cost of building a wireless network would be at least hundreds of millions of dollars.

But Cox could sell phones under its own brand. Bye had no details on what handsets would be available, or what they would cost. Nor would he say which business model the company will use.

Other cable companies looking into wireless as well. Comcast and Time Warner Cable Inc., rather than building their own wireless networks, are investing along with Sprint in a venture that is building a network based on a new wireless data technology known as WiMax.


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