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Cox Pulls Out of Wireless

Cox Communications Inc. announced Tuesday night that it is shutting down its wireless service on March 30.

The MSO will stop selling the service on Wednesday (Nov. 16). Customers will get a $150 credit for every line of wireless phone service being disconnected, a gesture meant to help with their transitions to new providers. Cox is also waiving early termination fees.

Cox, which was piggybacking its wireless service on the Sprint Corp. (NYSE: S) 3G network, said its decision was "based on the lack of wireless scale necessary to compete in the marketplace, the acceleration of competitive 4G networks as well as the inability to access iconic wireless devices."

Theoretically, Cox had a shot at the iPhone once Sprint got hold of it, but the MSO was non-committal about its interest (or lack thereof) in offering the device. (See Cox Dodges iPhone Question.)

Cox isn't disclosing how many customers signed on for the service since it launched in November 2010, about seven months later than expected. Cox was on track to deploy wireless service in about half its footprint by the end of 2011, and so far it had gotten up and running in Hampton Roads and Roanoke, Va.; northern Virginia; Orange County, San Diego and Santa Barbara, Calif.; Omaha, Neb.; Oklahoma City and Tulsa, Okla.; Rhode Island; and some pockets of Connecticut and Cleveland.

The decision isn't earth-shattering. Cox is on the verge of a significant reorganization, and it had already pulled back on a plan to build its own 3G and Long Term Evolution (LTE) network using Advanced Wireless Services (AWS) and 700MHz spectrum obtained at auction for about $550 million. (See Cox Gets Ready to Reorg.)

Why this matters
It's another failed attempt by cable to enter the hyper-competitive mobile voice market -- Cox and several other MSOs pulled out of the Pivot partnership with Sprint in 2008 -- and it's likely to make MSOs even more gun-shy about developing wireless strategies. (See MSOs Pivoting Away From Sprint JV.)

For more
Read about the trials and tribulations of Cox's wireless foray.



— Jeff Baumgartner, Site Editor, Light Reading Cable



Jeff Baumgartner 12/5/2012 | 4:48:52 PM
re: Cox Pulls Out of Wireless

By the way, Cox declined to say how many employees are part of its wireless operaiton "and no decisions have been made at this time related to employees," it added.  So no word yet as to if or how deep Cox might have to cut as a result of the decision.


But earlier word of the Cox reorg offered a sense that something big was coming at the wireless division, as the MSO's plan included the integration of its wireless business and a general centralization of operations and elimination of redudant functions. JB


 

craigleddy 12/5/2012 | 4:48:51 PM
re: Cox Pulls Out of Wireless

No cigar. Nice try by Cox to enter the mobile realm, but it's too difficult for an individual MSO to pull off. Cox obviously will incur shutdown costs, but they're sitting on some valuable spectrum. I wonder how things are going for the MSOs involved with Clearwire -- anyone have some info?   

Jeff Baumgartner 12/5/2012 | 4:48:51 PM
re: Cox Pulls Out of Wireless

I asked Cox what options were on the table regarding its spectrum, including the possibility that they could sell it.  They aren't committing to any next steps in that area.  Their comment:


"We don't believe this decision has any new impact on our 700 MHz and our AWS spectrum. We remain in full compliance with FCC spectrum requirements."


But there was a rumor a while back that perhaps the major MSOs that have spectrum (TWC, Comcast, Bright House... and might as well toss in Cox now) might pool it in exchange for an equity position in Sprint. But, again,  that's in the category of speculation and rumor.


JB

comtech3 12/5/2012 | 4:48:51 PM
re: Cox Pulls Out of Wireless

It was a foolhardy effort on their part to enter the crowded cell phone space anyway.Comcast say that years ago when they were the first MSO to provide cell phone service.They eventually sole that business to Cingular,which was later acquired by AT&T. At the time when Comcast had their cell phone business,there were very few providers but they anticipated,and rightly so, that it would crowded with providers and that it would have been costly to maintain along with their core business of video and highspeed Internet access.


So, what is Cox going to do with all that spectrum?

AESerm 12/5/2012 | 4:48:49 PM
re: Cox Pulls Out of Wireless

This wasn't a huge surprise, given their pull back on 3G and LTE. But unfortunate, as Cox internally had signaled the intention not to screw this up. But in a bigger picture, maybe the industry needs more failures, as there's no way to get to where it needs to get without trying a lot of new things, and probably no way to succeed at them all.

SellTower 12/5/2012 | 4:48:38 PM
re: Cox Pulls Out of Wireless

Cox found out firsthand how expensive it is to deploy its own wireless network.  Apparently, the MVNO option was not feasible either.  If a telecom company with a strong customer base could not compete in the wireless market, then I have serious misgivings that another company could enter the market.  All the more reason for the FCC and DOJ to block the AT&T acquisition of T-Mobile.


SellTower Consulting


www.selltower.com

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