Will cable's wireless gamble pay off?

All eyes will be on the cable operators to see whether their wireless offerings take flight in 2010. Several of the major cable companies have wireless efforts in progress. Cox Communications is launching wireless via Sprint Nextel's CDMA network, while Comcast and Time Warner Cable are offering WiMAX via Clearwire's network. But much of their success will be determined by whether these firms can convince customers there is additional value in signing up for a wireless service through a cable operator.

"They've known for years that having wireless as part of the service offering--which is what they did with Pivot--is important," said Michael Grossi, a partner at Altman Vilandrie & Company. Pivot was the ill-fated wireless joint venture formed in 2005 by Comcast, Time Warner, Cox and Advance/Newhouse in partnership with Sprint Nextel to offer wireless services alongside the cable firms' TV, high-speed data service and landline telephony services.

The cable operators invested a combined $100 million in Pivot, with Sprint investing another $100 million. However, Pivot folded in April 2008, and Pivot customers were converted to Sprint customers. At the time, analysts said Pivot suffered from integration issues and a dearth of customer demand.

After Pivot's demise, Comcast and Time Warner became investors in Clearwire, the mobile WiMAX operator, in which Sprint holds a majority stake. Meanwhile, Cox decided to forge its own path, and plans to build its own CDMA EV-DO network using its AWS and 700 MHz spectrum holdings and equipment from the likes of Starent Networks and Huawei.

Despite the different approaches, these cable firms all want the same thing: to fill a hole in the services they offer.

Cox goes its own way

cox wireless marchIn December, Cox began rolling out its initial wireless test markets in Hampton Roads, Va., Omaha, Neb., and Orange County, Calif. The company is initially using Sprint Nextel's EV-DO network for these test markets. Later this year, Cox will roll outs its own CDMA network on its AWS spectrum, and will use Sprint as a roaming partner. So far, the company has not said how much it will charge for its wireless services.

Eventually, Cox plans to deploy LTE services on its 700 MHz spectrum, and is looking to "commercialize that spectrum at the earliest possible opportunity," according to Stephen Bye, Cox's vice president of wireless services.

"We've sort of been public about this for quite some time now, that we think the evolution towards LTE is the right answer for us," Bye said in a recent interview with FierceWireless. "And we think there's a global ecosystem out there that's emerging to support that that will bring scale and unit cost that we can take advantage of."

Cox has been offering home telephony services since the mid-1990s, and sees wireless as its chance to ride the wave of rising mobile data traffic.

"One may argue that we're getting into the industry late. We still think we're fairly early in that next wave of adoption, and see an opportunity as video and data services become more prevalent outside the home on mobile devices," Bye said.

It's a risky proposition for Cox, which is positioning itself as a traditional wireless voice player. Grossi said Cox is likely looking long-term with this bet, since it will have to recoup the investments it makes in its network, in acquiring handsets and in costs per gross addition. "It still comes down to numbers of subscribers," he said. "The business case will prove itself by ultimately how many subscribers they get, and how long it takes them to get there."...Continued

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