On the Hot Seat with Cox's Stephen Bye

'Contrarian' Cox readies mobile wireless business launch

Citing the adage that "contrarian investors buy straw hats in winter," Cox Communications Wireless Vice President Stephen Bye defended the cable operator's decision to plow full steam ahead with its own mobile wireless play in 2009 and explained how he believes a cable operator, on its own, can enter into a highly competitive market in a suffering economy. During an interview with FierceWireless contributing editor Jim Barthold, Bye touched on subjects such as spectrum, Cox's relationship with Sprint and how Cox is doing something different than what its cable brethren have done as part of a Clearwire WiMAX play.

FierceWireless: Cox has always been a cable maverick but this seems to be a clear break. Why go your own way now?

Bye: One of the things we learned from the Pivot [the failed joint venture with Comcast, Cox, Time Warner Cable, Advance/Newhouse and Sprint Nextel] experience was that it is very important for us to have control. It's very important to us to make sure that we have the infrastructure, the assets, the capabilities and control points.

FierceWireless: But you're still tied to cable through SpectrumCo, the joint venture with all the same players that spent $2.37 billion to buy 137 AWS licenses. Doesn't this restrict your independence?

Bye: We recently filed with the FCC petitioning for that (AWS) spectrum (for which Cox paid $248.3 million) and transferring those licenses out of SpectrumCo and directly to Cox.

FierceWireless: So you'll be using conventional licensed wireless spectrum for your 3G play? What happens to the 700 MHz spectrum you separately purchased--again, as a standalone entity--in another FCC auction?

Bye: Our networks will be using our AWS spectrum initially but we are looking to take advantage of our 700 spectrum. It's a new band and the technology is still in its infancy but we'll definitely take advantage of that as the ecosystem evolves around 700 MHz.

FierceWireless: You say ‘your markets.' Does this mean you'll offer wireless where you have cable franchises? If so, how do you handle the rest of the country/world?

Bye: We have a relationship with Sprint to take advantage of their network and the capability to use their spectrum. We have no intention of launching a Cox wireless service outside our markets [New Orleans, Atlanta, San Diego, Omaha, Las Vegas, much of Kansas and southern New Mexico] but our customers will be able to take advantage of their Cox Wireless service wherever they are in the country. We need partners like Sprint to be able to facilitate that.

FierceWireless: Sprint has been, generously speaking, on shaky financial ground lately. Are you interested in perhaps just buying it and having your own national wireless entity?

Bye: (Laughing) Standard comment, standard response. We don't comment about what we might do or any kind of acquisition options that we may be considering. We're in no position to comment. No comment at all.

FierceWireless: How does Cox build out a wireless network?

Bye: We own some of our own towers that we lease to other cellular operators and we'll be taking advantage of those assets. We have very deep fiber networks. We have existing call centers in all our markets. And in addition to the voice network, we have a very extensive IP core data network and we'll be adding wireless to that as well. One of the biggest challenges to a wireless carrier is the backhaul ... and we have very deep fiber networks to support our broadband and video business.

FierceWireless: Will you bundle wireless?

Bye: We'll be offering the service in a number of ways. If the customer wants to buy the wireless service on its own, we'll absolutely sell it, but we think the value the customers will see is with the bundle. We see wireless as an integral component of our business going forward and in order to deliver the experience that customers look for in terms of a bundle... to have one rep that sits in a call center or retail locations... one point of contact. To be able to achieve that requires significant investment in the back office.

FierceWireless: Will this network be a 3G, 4G or some kind of hybrid like Clearwire is doing with WiMAX and 3G?

Bye: We're going to be launching with 3G. As we build our network it is with a view to 4G. Our 3G network is there to support what handsets are available today; 4G is still some time out there in the future... and we want to be on a path to get to 4G and minimize that investment to get there.

FierceWireless: Speaking of handsets, who are your vendors?

Bye: We haven't announced our partners on devices. We're working with a number of partners.

FierceWireless: There's movement within cellular to include WiFi on mobile devices. In Cox's case, with your in-building broadband presence, it would seem WiFi would be a natural. Is it?

Bye: We definitely see the value in having WiFi in our devices and being able to enable that connectivity, really less around voice and more around being able to move content in and around the home. The whole industry appears to be moving in that direction... and we're going to be very interested in that trend and follow it closely because that takes advantage of our broadband connectivity into the home.

FierceWireless: Into the home? Is this just a residential play? Cox, is, after all, one of cable's bigger commercial operators.

Bye: Business is a great market segment for us. That's also a segment that's really hard to serve from a wireless perspective so there's tremendous opportunity for us there from a business side. Also you're seeing blurring of the lines between the high-end prosumer SOHO and the small business and small proprietor and the features and functions those customers are looking for.

FierceWireless: Your wireless service launches next year. Which of Cox's 6.2 million households and businesses get it first and how many subs do you expect by the end of the year?

Bye: I can't talk about projections for next year. In terms of investment, we look at it from a long-term perspective. You have to take a long view and be prepared to ride through different elements in the business cycle.

FierceWireless: In an obvious understatement, it appears that the business cycle is on spin. How will the economy impact your plans?

Bye: The economy is challenging but people still rely on and have a need for communications services. We see that in our core business where people continue to buy phone service from us; continue to buy their high-speed data service from us; continue to buy their video service from us. In all our research and talking to our customers, they're very interested in buying wireless from us as well.