Cox Plans 700MHz Phone Service

Posted by Sam Churchill on

I’m all hung up, Vicki. — Thomas Crown Affair

Cox Communications plans to launch cellphone service in the second half of 2009 (pdf) using the 700 MHz spectrum they bought last year.

“We’ve spent $500 million buying wireless capacity in our markets,” President Pat Esser says. “Now, we’re going to turn it on.”

Cable operators have long seen cellphones as an important weapon to compete with AT&T and Verizon, which are rolling out TV services that compete with cable’s core video business. Comcast (25M) and Time-Warner Cable (13M), the first and second largest operators in the United States, have joined with Sprint on a 2.5 GHz Mobile WiMAX initiative. Cox is the third-largest cable television company in the United States, with more than 6.2 million total residential and commercial customers scattered through 15 states, with major markets including San Diego, New Orleans, Las Vegas, Phoenix and Oklahoma City.

Cox will utilize the Nationwide Sprint Network to quickly enter the market in 2009. At the same time, Cox will concurrently build its own 3G wireless network at 700 MHz for additional market launches in 2009. Cox will also test 4G technology utilizing LTE. Earlier this year, Cox joined the CTIA, the Rural Cellular Association, and CDMA Development Group (CDG).

The FCC’s 700 MHz auction raised $19.6 billion for the U.S. Treasury with AT&T Wireless and Verizon Wireless accounting for the bulk ($16 billion). Here’s the FCC’s full list of 700 MHz winners. Commissioners Michael Copps and Jonathan Adelstein issued separate statements; (Copps and Adelstein).

700 MHz Spectrum Winners (2008)
Source: Telephony
  Bidder Total bids Spectrum acquired
#1 Verizon Wireless $9.36B C Block open access covering lower 48/key metro and economic areas
#2 AT&T $6.64B B Block metro licenses in large cities across the U.S.
#3 EchoStar/DISH Network $711M 168 E block (unpaired) licenses across the U.S.
#4 Qualcomm $588M E Block licenses in Boston, Los Angeles and New York City; placed sole bid on D Block public safety license (but didn’t win)
#5 MetroPCS $313M Single A Block license in Boston
#6 Cox Communications $304M 14 A block, 8 B block
#7 US Cellular $300M 25 A block, 127 B block
#8 Cellular South $191M 14 A block, 10 B block
#9 CenturyTel $150M A and B Block licenses in its LEC territory
#10 Vulcan Spectrum $112.8 $43.6 million for A Block” in Portland, Salem and $69 million for Seattle, Tacoma, Bremerton

AT&T will cover 100 percent of the top 200 markets when their auction winnings are combined with their purchase of Aloha Partners’ 700 MHz spectrum. Combined with their AWS spectrum coverage, AT&T will now cover 95 percent of the U.S. population with new cellular licenses.

Verizon’s C-Block coverage (right) appears nearly total.

Qualcomm and Echostar bought up most of the 6 MHz that will likely be used for mobile television with Qualcomm picking up the California coast and NE, while Echostar covers most everything else. The auction failed to attract significant new competitors.

In a separate but related joint venture, Cox, Comcast and Time Warner Cable, previously picked up 137 AWS licenses covering almost 270 million potential customers in 2006’s Advanced Wireless Services auction (at 1.7/2.1 GHz).

Comcast was a big winner in the AWS auction. SpectrumCo, the cable venture formed to buy AWS frequencies, was the third highest bidder at the AWS auction in September, 2006. They paid $2.4 billion for 137 licenses in cities that include New York, Boston, Washington, Detroit and Atlanta. Sprint later got completely out of the SpectrumCo group.

Top 10 Highest AWS Bidders
Bidders Net total of high bids
1. T-Mobile $4.2 billion
2. Verizon Wireless $2.8 billion
3. SpectrumCo $2.4 billion
4. MetroPCS $1.4 billion
5. Cingular $1.3 billion
6. Cricket $710 million
7. Denali Spectrum $365 million
8. Barat Wireless $127 million
9. AWS Wireless $116 million
10. Atlantic Wireless $81 million
Click here to find out who is backing these bidders.

SpectrumCo won 137 AWS licenses for $2.37 billion. Comcast’s share was $1.29 billion, followed by Time Warner Cable’s $632.2 million, and Cox’s $248.3 million. (See SpectrumCo Gets Licenses).

Now Comcast plans to invest more than one billion dollars in the Sprint/Clearwire/Google deal, with Time Warner cable investing another $550M (and Brighthouse networks in for another $100M). The cable/WiMAX deal has plenty of spectrum — and can utilize Sprint’s cellular infrastructure.

The fate of SpectrumCo, the venture that bought AWS frequencies for cable operators, remains to be seen. With Cox owning both 700MHz and AWS frequencies, they will likely utilize both in a wireless strategy. But Comcast and Time-Warner are moving towards 2.6GHz (with Mobile WiMAX). Building a separate AWS network with a different (incompatible) technology does not make a lot of sense economically or technically. The SpectrumCo AWS licenses owned by Comcast and T/W could be up in the air.

T-Mobile USA expects to spend some $10.3 billion over three years ending 2009. T-Mobile spent $4.2 billion on the AWS band (1.7/2.1 GHz), in 2006 which doubled the amount of spectrum it had in the top 100 cities. Now it’s spending billions more to build out the network. For cable operators, the incremental expense of joining the Sprint/Clearwire network is probably cheaper than a do-it-yourself AWS network from scratch — and WiMAX has spectrum to burn — with an operational 4G system.

Cable’s AWS spectrum is beginning to look like a white elephant.

Cable’s AWS assets might be worth billions on the open market. Then it would be Cox with 700 MHz and cellular roaming on the 700MHz service through Verizon or AT&T. Comcast and Time-Warner might go for Mobile WiMAX, with cellular roaming partner Sprint. Chunks of AWS might then be up for grabs and attractive for European, Middle East or Asian operators (with American partners).

Meanwhile, Cablevision has gone live with its metro Wi-Fi network in Long Island, a service it is offering free for its cable modem customers. In May, the operator said it would spend more than $300 million over the next two years to build out a Wi-Fi network throughout its metropolitan New York City service area.

There are 65 million basic cable subscribers in the United States, or 58% of the 112 million homes passed. Advanced services on digital cable are expected to fuel growth. Digital video subscriptions are expected to jump to 56 million by 2011, says market researcher Kagan. The rise of digital penetrations above 80% of basic subscribers will open the door for additional video-on-demand, DVR, HD and other interactive services, according to SNL Kagan. The average cable bill has soared from around $22 a decade ago to $60 in 2006.

Related 700 MHz articles on Dailywireless include; FCC: What’s Wrong with 700MHz Public Service?, Public Safety: We Like 700MHz Public/Private Plan, Hearings on 700MHz Auction, T-Mobile Launches AWS in NYC, Canadian AWS Auction: Encouraging Competion, Free 2155-2175 MHz!, FCC Wants Cellular Alert System, 700MHz: Money Talks, Reed Hundt Talks, Congressional Fix for Universal Service, Verizon Makes its Move for Universal Service Fund, FCC Finalizes Rules on 700MHz: Limited Open Access, No Wholesale Requirement, Frontline: Out of Business, Google’s 700 MHz Plans, AT&T “Open” to 700MHz — Not, AWS Auction: It’s Done!, RUS Funding for 700 MHz, Rural Broadband Gets A Plan, Cyren Call Proposes Joint Commecial/Muni for 700Mhz, 700 MHz Scenarios, AT&T Buys 700MHz from Aloha, Google Android hits G-Spot, Google’s 700 MHz Plans, Cyren Call to Manage Public Safety Spectrum, Android Developer Challenge — $10M, Oregon’s $500 Million Statewide Wireless Network, General Dynamics Wins IWN Contract, Joint Commecial/Muni Proposed for 700Mhz, Small Ops Squeezed Out of 700MHz?, The Smartest Guy in the Room, 700 Mhz Worth $28B, The 700 Mhz Club.

Posted by Sam Churchill on Monday, October 27th, 2008 at 7:48 am .

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