Pay-TV service provider Cox Communications, having gone private, no longer provides detailed quarterly financial numbers as the government requires of publicly traded companies. In an announcement that was very short on details, Cox this week patted itself on the back by saying that at the end of 2008 it had 4 million broadband subscribers.
Broadband may be the cablecos’ most profitable line of business because of the small incremental cost that’s required to deploy broadband over their existing networks. In fact their networks can be upgraded to DOCSIS 3.0 technology which will allow cablecos to offer speeds comparable to telco fiber to the home and fiber to the neighborhood. Both of those require replacing all or most of the telcos’ existing copper-wire network.
Perhaps wanting to increase credibility for its telephone access operations, Cox also said it now has more than 3 million telephone access lines, presumably including residential and business. Cox said it is “enticing more consumers to select Cox as their trusted provider of telephone and Internet services.”
Telcos worldwide, not just in the US, are losing residential phone subscribers at a rapid rate. Most telcos have a mobile phone business that is more than replacing the lost revenue.
Cox wants to attack that market too by launching a mobile phone/broadband service this year in areas where it offers its wireline services. Unlike the three cablecos (Comcast, Time Warner Cable and Bright House) who invested in and allied with Clearwire, Cox will use spectrum it won at a public auction and build its own mobile network. Sprint, Intel and Google also invested in Clearwire.
The Cox network will be both 3G and 4G. It has selected LTE, not WiMAX, as its 4G technology. AT&T and Verizon Wireless have also selected LTE. Sprint is expected to be a reseller of the WiMAX service that Clearwire is offering.
Cox will resell Sprint’s 3G cellular services in areas where it has not yet built its own network and offer near nationwide roaming to its mobile subscribers.
Cox did not say when or where it would begin offering the mobile service – or how much it would cost or what devices it would offer. But said its early wireless markets will be 3G whether through its relationship with Sprint or its own network being built. Cox confirmed that it expects to test LTE this year. Verizon Wireless too has said it expects to test LTE this year. AT&T, the other major US cellco that has committed to LTE, has not said when it would test LTE.
It also did not say when or even whether it would offer DOCSIS 3.0 speeds to its broadband customers. Fellow pay-TV service Comcast is committed to upgrading its entire network to DOCSIS 3.0 by year-end.
As for prospects for its mobile phone/broadband service, Cox has 6.2 million total residential and commercial customers. Assuming three people per household/business, Cox has almost 20 million potential subscribers that are already Cox customers. Add in the people in the homes and businesses that Cox’s wireline service passes, and the total number of prospects approaches 40 million.
AT&T and Verizon together can offer pay-TV to only a small percentage of homes and businesses that Cox’s network passes. The result is that Cox will have the upper hand when it comes to selling bundles. And selling bundles is something Cox is good at. At the end of 2008, just under two-thirds of Cox’s customers were taking at least a two-bundle service and over a third were subscribing to a bundle of all three services.