In the US, initially just in three of its major territorial heartlands, Cox Communications, one of the larger US cable companies, has launched its own CDMA 2000 3G cellular network. Cox bought spectrum on its own in its cable territories when the UHF 700 MHz spectrum was auctioned off in 2008.
Cable TV operators are coming under increasing pressure to offer quad play bundles, offering TV, Broadband, VoIP fixed voice calls and new cellular services, in order to compete with AT&T and Verizon, the telcos in the US, which have strong cellular operations.
It’s tough to imagine a cellular phone service which only operates in Hampton Roads Virginia, Omaha Nebraska and Orange County California, ever getting off the ground, but Cox continues to have an MVNO relationship with Sprint for the rest of the country and can no doubt roam through Sprint outside of those territories.
But this will be an interesting experiment in that Cox is a cableco moving into cellular, not the other way around. Many pricing plans which focus on four services for the price of three, or three for the price of two, have been designed to protect existing cellular revenues. Homes typically spend more on cellular accounts than they do on TV services because sometimes they support four or more cellular phone users and while an individual ARPU (average revenue per user) for cellular might be $60 a month in the US, and a TV service is more like $130, the latter is for an entire household, and often the cellular end of things costs more overall.
A cableco does not have to protect any profits in cellular and could offer very cheap cellular deals, rather than cheap TV deals, and perhaps overall be cheaper. Although as we can see below, this hasn’t yet materialized yet at Cox. Most of the other major cable operators in the US have had a partnership deal with Sprint and then added a deal with Clearwire for 4G WiMAX services.
The two new charging ideas which Cox has come out with are what it calls MoneyBack Minutes and Free Usage Alerts and it has added these benefits to bundle benefits, free long distance calling and a choice of a single upgrade to one of the other three services ‘ TV, Broadband or fixed voice.
MoneyBack Minutes is the process of giving you money back for cellular minutes not used at the rate of 5 cents a minute ‘ amounting to up to $20 a month – a significant departure from the industry standard by which consumers lose unused minutes or carry them over from month-to-month.
Cox will also send a free text message to users when they approach their maximum number of monthly voice minutes or text messages, something that Europe has been lobbying to get operators to do for the past two years, to create a ‘zero bill shock’ cellular environment. Cox is also offering a sign up bonus of a $200 prepaid Visa card.
Cox Wireless will also appear at the recently unveiled Cox Solutions Stores so there will be a localized retail presence. Smart phones on offer with the network include the HTC Desire, Hero and Wildfire, the Motorola Milestone, the LG Axis, Samsung Messenger and Profile and some feature phones.
Cox will also offer a Universal Contact Manager to manage, backup and organize all contacts across multiple services in one place and Voice Mail to Text facilities on all of its phones. Cox is also offering 3 wireless broadband deals for PC dongles, one at 200 MB for $40 a month, one for 5GB at $70 a month and one for 5GB a month for customers who already have Cox broadband at $60 a month. These prices seem to us to be introductory and hardly look competitive, so it seems like it has focused on voice users for now.