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Should the mobile operator community be concerned about cable operators?
Are mobile operators really worried about cable operators' entrance into the mobile world? The answer may be: It depends.
Earlier this month, cable provider Cox Communications revealed a little more about what it will do with the 700 MHz licenses it won earlier this year in the 700 MHz spectrum auction. Speaking at the Progress and Freedom Foundation's Aspen Summit, Cox President Patrick Esser said the company will provide simple calling plans and it will integrate all its services into one device with a consistent cross-platform interface that will make all the company's content and applications mobile. Cox has reportedly tapped Chinese infrastructure vendor Huawei to build its CDMA-based network in the U.S.
That sounds a lot like what Cox tried to do with other major cable companies and Sprint Nextel with the Pivot wireless venture. Pivot was supposed to enable cable partners to offer wireless service and applications such as wireless email and place-shifted programming. It was plagued with provisioning problems and basically ended up becoming another service cable customers could buy from their provider. The joint venture ended in April.
Before the demise of Pivot, Time Warner CEO Glenn Britt said interest in Pivot was tepid. And he questioned how wireless could help cable operators. "The broader point is whether people will really have a great desire to buy cell phone service from the people they buy wireline triple-play services from," Britt said last November. "There's nothing in our market research or experience to indicate demand for that is overwhelming."
Nevertheless, cable folks keep looking for ways to effectively compete in the wireless industry. We just don't know much about their plans. SpectrumCo, which consists of Comcast, Cox, Time Warner and others, is sitting on $2.37-billion worth of AWS spectrum. Charter Communications is sitting on spectrum in the 700 MHz band. Do these players really want to go outside of their core competency and spend billions on network rollouts? We have yet to see an outsider come into the wireless industry and successfully compete, and such initiatives have often turned into unwieldy mega-million dollar investments. Just look at EarthLink's muni-WiFi debacle.
Perhaps most promising is the investment Time Warner, Comcast and Bright House have made in the new Clearwire, which is combining with Sprint's WiMAX business, to create a nationwide WiMAX player. At least wireless broadband is more closely aligned to what cable operators are offering today. Moreover, Comcast's plans for femtocells might be the smartest strategy yet. Dave Williams, Comcast's senior vice president of wireless and technology, recently revealed that part of the cable company's deal with Clearwire calls for 5 megahertz of spectrum across the U.S. to be set aside solely for WiMAX femtocells.
The femtocell spectrum will be available for any of the new Clearwire partners to use, but Williams said that the cable companies will have the most incentive to use it because it allows them to cost-effectively deliver wireless to the home. While we continue to hear about the benefits of femtocells for the mobile operator community, namely expanding coverage and offloading high-traffic, femtocells will be just as important to cable operators. That's because residential mini base stations will require the mobile traffic to backhaul through a wireline broadband connection. Once consumers begin using their cable connections for such a purpose with mobile operators behind the initiative, cable operators risk losing their VoIP customers while giving up their bandwidth to the competition. Plus a player like Comcast has the power to guarantee QoS in the home.
As such, Comcast is smart to push WiMAX femtocells and content that will run over them before the proliferation of femtocells from the mobile operator community. And that notion is one that should concern mobile operators.--Lynnette
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Comments
Posted by Anonymous | August 25, 2008 - 5:56pm
You're quite a bit off in your observation. In fact, the experimental Pivot trial product sounds nothing like a final product, fully owned and operated by Cox, will sound, unless you know details about the product they will have Be mindful of the fact that Pivot was intended only to be a trial of the multi-company initiative, and was not engineered to be a finished product. Many of the systems in the Pivot trial were nothing more than third party controlled applications to provide education and to facilitate the experiment with wireless. Esser, and team are to be respected for the insight to test an idea. This trial was very successful in its intent to expose areas of critical importance and concern for building a top grade wireless product. As Pat Esser might comment, "Stay tuned, you haven't seen anything, solely owned and operated by Cox Communications, yet!"
Posted by Lynnette Luna | August 25, 2008 - 6:00pm
I disagree with you. Pivot was sold to the media to be commercial, not experimental. There are several articles that talk about that. It's easy to say it was an experiment after it failed. Lynnette
Posted by Anonymous | August 28, 2008 - 11:08am
We agree. Pivot did fail as a JOINT VENTURE commercial offering. It was definitely not a sole ownership offering by Cox. In fact, as an experiemental view into the wireless industry for what will be a sole ownership commercial offering by Cox, it may prove to have been a tremendous success done with the least expense possible. Hint. The marketing expense of a serious venture would have been far greater than the meager amount expended by Cox in the Pivot effort. What better way, with limited expense, could Cox have learned about the reality of providing wireless products, than as a minority partner of such an effort by the joint venture? The cumbersome nature of such a complex and complicated business structure almost broadcast difficulty and serious hiccups from the start. A handcuffed dependancy on the feeble operational systems of Sprint was a clear inhibitor of almost any hope of birthing an even more complex business. From the JV approach, Pivot flopped as an outright commercial venture. From an experiemental view, Cox may have considered the effort a tremendous learning experience. Ask Bell, Edison and the others, about experiemental failures before achieving success. Oh yes, the JV partners are following a different path than Cox for their next wireless experience, too. Both directions may show better results than Pivot. But, odds are, Cox will approach their next new effort in an entirely different way than with the JV's problem laden, administratively burdened Pivot bust. Cox has been very successful for years with cable, they have progressed nicely with advanced video services, they are clobering the telecos with internet, and are winning over more and more phone customers. Things point to their success in wireless. They may do some things different than the bigs. But, probably will do things right for the customers they're trying to please, as they offer a full array of communications services to meet their communications needs and wants. This would be right in line with Esser and company's Trusted Provider initiative. Check it out. WhenCox aims to please, they hit their mark.
