When the cable operator Cox launched its “unbelievably fair” wireless service in the U.S. a year ago, we asked right off whether the company had the scale to pick up enough subscribers to make the service profitable, in the face of an already saturated and competitive market. Today we have an answer: no. The company has announced that it is discontinuing its wireless service, effective today.
According to the note posted from Cox, it will stop selling Cox Wireless services from today, November 16. It will continue to provide service to existing customers until March 30, 2012, and will give customers offers for them to transfer to other carriers.
Mindful that the abrupt change is bound to upset some of its customers, Cox is laying on a bunch of extras to keep affected users sweet. Cox had built its mobile service on the back of bundles with its other products, namely pay TV, broadband and fixed-line phone services, and so customers affected by the closure will get $150 credits on their accounts towards these other offerings, as well as the ability to keep their existing devices — and of course the cancellation of any early termination fees.
It is not clear how many employees will be affected by the change, and whether they will be laid off or redeployed within Cox. We have contacted the company and will update this post with any new information.
This leaves a question, however, of how and if Cox will cover wireless in its offerings in future. Given the trend of migrating to “cord-cutting” options, taking over-the-top services like Netflix (NSDQ: NFLX) on a basic broadband subscription, is it short-sighted for Cox to cut out of a potential revenue driver so quickly?
According to a memo leaked to Engadget, Cox has noted, “We understand the importance of wireless to the Cox experience and are looking at several options.” That could mean more mobile apps for its customers, or potentially something more.
Cox had built its 3G service on the back of spectrum it had acquired in the 700 MHz band back in 2007. That service took nearly three years to get off the ground commercially, though — a crucial delay considering the explosion of mobile data usage, and the number of two-year contracts its competitors secured with smartphone-buying consumers in the meantime.
In its note, Cox mentioned two other challenges:
Its competitors were already moving on to building 4G networks while it was still trying to finish its 3G build. In the end it still had only built out to 50 percent of its footprint — something that even moving over to an MVNO model, through a deal with Sprint in May, couldn’t help.
Devices. Cox also cited its “inability to access iconic wireless devices” to attract new users. It had a fair number of Android devices, but no iPhone, and no exclusivity on the devices it did carry.
It’s unclear how many users Cox actually had at the end of the day using Cox Wireless (again, we have asked the company for a number), but considering that it was closed rather than sold, it does raise the question of whether there were many at all.