Previous page
Grossi estimates that Cox will have to add somewhere between 500,000 and 1 million wireless subscribers to make its investment worth it, but that success will depend on how much average revenue per user (ARPU) Cox can sap from its wireless subscribers. As for Cox's pricing, Grossi said the carrier's bundle likely will be anchored by local calling plans in the $40-$50 per month range.
The plans "have to be at least on parity with Verizon and AT&T's, and likely it's got to be below," he said.
Who exactly is a Cox wireless customer? Bye said the offering is definitely aimed at customers who subscribe to Cox's bundled services and are looking for a wireless alternative. By targeting its existing customers, the company is building on its gains in the local landline market. "They're quite dominant in the local voice market in a couple of their markets," said Joe Kestel, an analyst at New Paradigm Resources Group.
Grossi also said Cox--and the other cable companies--are offering wireless as part of a bundle because they surveyed their own customers and found that customers who buy bundles are low-churn subscribers, bring increased ARPU, have a longer customer life and therefore bring higher longtime value.
For Cox and the others, their main marketing goal will be to convince customers of the value of getting wireless through their known cable company. "Consumers are getting conditioned to the fact that there's value to buying a bundle," Grossi said.
Clear as daylight?
Comcast and Time Warner, meanwhile, have essentially hitched their wireless ambitions to Clearwire's buildout schedule. Both companies offer their own branded mobile WiMAX service as wholesale customers of Clearwire: Comcast's is called Highspeed2go and Time Warner's is Road Runner Mobile. While they do not offer service in all of Clearwire's mobile WiMAX markets, they are bound by Clearwire's buildout plans, which currently call for 80 markets and 120 million POPs covered by the end of 2010. Comcast offers bundled plans ranging from $49.99 per month to $69.99 per month, while Time Warner's bundles range from $39.95 per month at the low end to $79.95 at the high end.
For Comcast and Time Warner, offering wireless service via Clearwire is a simpler way of providing wireless services without fully committing themselves. "For the MSOs that had been burned at least once, this is a little more risk conservative," Kestel said. "It doesn't require them to do all of the heavy lifting."
Representatives from Comcast and Time Warner declined to comment for this article.
Comcast and Time Warner can also use Clearwire's network to push their TV offerings to mobile users, said William Ho, an analyst at Current Analysis. "It's no stretch of imagination," he said.
Indeed, Comcast is already going that route. In December it began rolling out XFINITY TV to between 8 million and 10 million Comcast subscribers across the U.S., allowing them to watch TV on their computers.
Investing in wireless
Grossi said that just like Cox, Comcast and Time Warner each have targets for how many wireless subscribers they need to hit to make their investment profitable. But in the end, he said, the companies' investment in Clearwire may be just that: an investment in the company's spectrum position. "If it doesn't work out, you can always sell it," he said.
What will determine cable companies' wireless fate? Grossi said they will have to differentiate themselves based on the services they offer--and on price.
Cox's Bye said cable firms will have to build out robust infrastructure and service offerings, and have distribution models that match. But Bye also noted: "You have to have to a marketplace that sees you as a credible provider of those products and services."
Previous page