Cox Communications, the third largest cable television provider in the U.S., today entered the mobile voice and data market after more than two years of planning to supplement its cable offerings with wireless services. Instead of touting the “quad-play” approach of cable, landline, Internet and wireless, Cox is focusing on being truly competitive in wireless. Its “Unbelievably Fair” phone plans offer cellular phone service at prices comparable to the larger, national carriers, but with advantages that established competitors don’t yet offer: a monthly refund of up $20 for unused minutes and customer-friendly, pro-rated ETF charges.
Cox has chosen Hampton Roads, Va., Omaha, Neb. and Orange County, Calif. to first offer the new cellular service and will expand to other areas where it has a strong cable customer foothold in the future. Current cable customers who purchase wireless service from Cox get a free add-on service such as a premium channel group, which sweetens the deal. The company’s wireless voice and data service launch is another win for Sprint’s (s s) wholesale division as well; Cox mobile customers will be using the nationwide Sprint network for voice and 3G. But that win may be temporary, as Cox is positioned for a future with its own wireless network.
Planning ahead, Cox participated in wireless spectrum auctions, both in 2006 and 2008. The cable provider spent $550 million on AWS and 700 MHz spectrum, the latter of which, Cox has been using to test LTE service for the past year. Indeed, back in January when the traditional carriers were still semi-mysterious about 4G network plans, Cox had successfully delivered both a voice call and high-definition video over LTE on a test network.
LTE is still a future play for Cox, however. More immediate are the first steps to get wireless customers under the Cox umbrella of services, and the company has made some wise decisions that should help it gain customers. Plan pricing is competitive for a carrier without its own network: $39.99 per month buys 450 voice minutes, while $99.99 each month gains unlimited talk, text and web use, for example. Individual data plans are in the ballpark too: $30 a month adds unlimited data to smartphones while $60 each month buys 5 GB of service for a mobile broadband modem. A key differentiator is the $5 to $20 monthly credit for unused minutes on the limited plans. AT&T’s rollover minutes are the closest competition to this, but I think consumers on limited plans would rather have immediate financial value from unused minutes, not some potential future value.
Unlike some regional providers and MVNOs, Cox’s phone portfolio isn’t made up of handsets from two years ago, either. While limited in choice, Cox is offering both feature phones and smartphones, such as the Motorola Milestone (s mot) and HTC Desire, two Android (s goog) devices that launched within the past year. These might not be cutting-edge smartphones, but they’re capable devices that can thrive on a solid 3G network. Cox is also attempting to treat customers better than competitors too: the early termination fees for devices decrease by 1/24 each month, so customers don’t feel the carrier is making money on ETF charges in case of a phone swap. Cox will also send a free text if customers approach 95 percent of their monthly minutes or messages.
Essentially, Cox is showing the current wireless operators how voice and data service should be done: position the pricing plans as a good value, but making them even better with refunds for unused minutes while keeping customers informed about usage so they can adjust accordingly. If Cox is doing this with voice and 3G on someone else’s network, I can’t wait to see what it offers after its LTE network goes live. Maybe more importantly, it will be worth watching if the “big boys” in the wireless industry take note of Cox’s strategy in a future with more competition.
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