Cox Communications Inc. is building its own cellular network to eventually offer mobile voice, data and entertainment in all the markets it serves across the U.S., the cable operator said Monday.
Cox is one of the nation's largest cable providers, with 6.2 million residential and commercial customers. Though it has offered fixed-line phone service since 1997, Cox does not have any mobile services today.
The company will partner with Sprint Nextel to quickly launch 3G (third-generation) service next year, but is also building out its own network for launch next year in some of the markets it serves, said Cox spokesman David Grabert. Overall, four markets will go live in 2009, he said. The company did not disclose those markets or dates for availability. The same features and services will be offered both in markets served directly by Cox and those in partnership with Sprint, Grabert said.
Cable operators are bundling services, including TV, broadband Internet, voice and mobile, to ultimately offer subscribers a one-stop shop and a single bill. They hope bundling also keeps customers more loyal.
By building a mobile network of its own, Cox is committing itself to an expensive and complex project that its rivals have left to partners already in the cellular business. Comcast, Time Warner Cable and Bright House Networks have joined with Sprint and Clearwire to help build out a national WiMax 4G (fourth-generation) mobile broadband network and plan to offer services on it.
Cox said it is building its own infrastructure so it can control the whole operation, including marketing, sales, back-office operations, customer support and billing. This will help the company maintain its strengths of network reliability and good customer service, according to Grabert.
"We've learned that the best thing for us is to manage services holistically," Grabert said.
Among other things, the service will let Cox subscribers use their mobile phones to program their digital video recorders, watch TV programs and access content stored on their home PCs, the company said.
The network initially will be based on CDMA (Code-Division Multiple Access), which is also used by Sprint, but Cox will also test LTE (Long-Term Evolution), the 4G technology growing out of GSM (Global System for Mobile Communications), for possible future use. Cox said it has already invested more than $500 million in wireless spectrum licenses as well as infrastructure and people to build its own network.
Cox serves customers in 28 major markets across the U.S., including Phoenix, New Orleans, central Florida, Rhode Island, Connecticut and Las Vegas, according to a service map provided by the company. It plans eventually to build out its own mobile network to cover all those markets. The company will make roaming deals to ensure that its subscribers have mobile service across other parts of the country, but it has not yet disclosed whether Sprint will be that roaming partner, Grabert said.
Cox might make its gamble pay off if it learns from earlier mistakes by cable operators, such as Comcast Corp., trying to bundle mobile services, analysts said.
Pricing and packaging, as well as cultural differences between mobile and cable companies, doomed earlier efforts, said Philip Marshall, an analyst at Yankee Group Research Inc. According to independent telecommunications analyst Jeff Kagan, the cable companies thought their subscribers would sign up for bundled mobile without aggressive advertising. Both said the mobile offering has to have its own reason for people to buy, apart from just being bundled with TV and broadband.
Tighter control might help Cox achieve that, Marshall said, by making it easier for the company to quickly roll out new services. But he warned those futuristic ideas may not pay off anyway.
"The solutions you think will be adopted in the market generally are not," Marshall said.
Kagan warned the cable operators ultimately will need mobile offerings to compete with telecommunications carriers -- such as Verizon Communications and AT&T -- that are already established in both broadband and wireless and are now going after TV. But Marshall said it will be an uphill battle.
"It's a massive investment, and it's always difficult at this stage in the market to try to go in with a mobile play," Marshall said. "It's a mature market."