Cox Communications, the country's third-largest cable company, is launching its long-planned cellular network in three scattered areas on Friday, taking on cell-phone companies on its home turf.
It's a rare new entrant in the wireless market, but one that's available only in Orange County, Calif., Omaha, Neb., and Hampton Roads, Va. - all areas where Cox is the local cable company. They have about 1.5 million residents, Cox said.
Cox plans to expand the network, but hasn't said where or when. It has spent $550 million to buy rights to use wireless spectrum in and around Atlanta, New Orleans, San Diego, and Las Vegas as well as much of Kansas and southern New Mexico. Those areas have about 23 million people, said Stephen Bye, Cox's vice president of wireless.
Cox's buildout is the most ambitious plan by a cable company to get into wireless. But all the major ones are involved in wireless to some extent, seeking to blunt the edge of phone companies, which can offer both home and wireless services on the same bill. Cablevision Systems (CVC) has built out an extensive Wi-Fi network, and Time Warner Cable (TWC) is reselling Clearwire's (CLWR) wireless broadband service under its own brand.
Targeting Cable Customers
Cox is using its own cell towers and will be selling phones in its own stores. The plans are comparable to those from the major phone companies. For instance, 450 minutes of calling will cost $40 per month, and $100 will pay for unlimited calling, texting and Web use. The launch lineup includes five smart phones running Google's (GOOG) Android software.
In a wrinkle, Cox customers will get 5 cents back for each minute if they use less than their calling-plan allotment every month, up to a maximum of $20 per month.
Cox is aiming the service at its cable customers, throwing in perks such as free premium cable channels to those who add wireless to their bundle of services.
Cox, a privately held company based in Atlanta, is taking advantage of its position as the local cable company in another way as well. It already owns cell towers that it's been renting out to phone companies, carrying the calls and data traffic from towers over the optical communications fiber it originally laid down to carry video signals to its cable systems. Even so, building out a wireless network is likely to cost several hundred million dollars.
Where Cox doesn't have its own network, subscribers will be "roaming" on the networks of Sprint Nextel (S) and other carriers, incurring no additional fees.
Cable companies have a long history of dabbling in wireless. Cox built and operated a cellular network covering Southern California and Las Vegas in the 1990s, then sold it to Sprint in 1999. Comcast (CMSCA), the country's largest cable company, also owned a wireless network in the '90s and had ties to Sprint.
The cable companies teamed up with Sprint again in 2005 to market wireless service to their video customers, but the project was abandoned in 2008.