Cable TV provider Cox Communications is set to announce Monday that it plans to have its own cellular network up and running next year, a move that intensifies cable's competition with phone companies.
Cox had signaled an interest in building a wireless network by spending $550 million on licenses to use the airwaves. But such spectrum purchases don't always lead to the building of a network, and privately held Cox hasn't previously detailed its plans.
The Atlanta-based company plans to build its own network in its cable service area, and partner with Sprint Nextel for roaming outside those areas.
Cox's spectrum licenses 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, said Stephen Bye, Cox's vice president of wireless.
Wireless phone service will add to Cox's video, phone and Internet services to head off competition from phone companies like AT&T and Verizon Communications, 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.
Cox itself built and operated a cellular network covering Southern California and Las Vegas in the 1990s, then sold it to Sprint in 1999. Comcast Corp., the country's largest cable company, also owned a wireless network in the 1990s 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 scuttled this year.
Bye said 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.
Forrester Research analyst Charles Golvin said Cox probably did the right thing to get out of wireless in the 1990s to focus on upgrading its cable network with optical fiber that carries broadband and wired phone service.
In building a new wireless network now, Cox can take advantage of that fiber. Generally, wireless carriers are struggling with getting fast fiber-based data connections to their cellular towers. They need the fiber to handle higher wireless data speeds used by smart phones like the iPhone and wireless laptop cards.
Even though Cox can use its dense fiber network for its cell towers, the cost of building a wireless network will be at least hundreds of millions of dollars, Golvin said.
Cox will be selling 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. National carriers like Sprint subsidize their phones and recoup the money through minute-based plans. Smaller, regional CDMA carriers Leap Wireless International and MetroPCS Communications don't subsidize their phones, and sell cheaper, unlimited-calling plans without contracts.
Other cable companies also have their fingers in wireless. Rather than building their own wireless networks, Comcast and Time Warner Cable are investing along with Sprint in a venture that is building a network based on a new wireless data technology known as WiMAX.
Cablevision Systems Corporation, a New York-area cable company, is building its own wireless network, but it's a less ambitious project than Cox's. It's using free airwaves and Wi-Fi technology to create a mesh of Internet hotspots over its cable service area.