Cox hangs up on cell phone service

Cox Communications is shutting down its wireless phone service, the company announced late Tuesday.

The cable provider said that it will stop selling its wireless service to new customers starting Wednesday, November 16. But it will continue offering the service to current customers until March 30, 2012. The company is offering current customers a $150 credit for every line that is being disconnected. And it is also waiving early termination fees.

Cox uses Sprint Nextel's 3G wireless network to deliver its mobile phone service. The company said that it was discontinuing the service because it was unable to compete against larger wireless carriers that have wider footprints and access to cooler devices.

"Cox's decision to no longer sell its 3G wireless service was based on the lack of wireless scale necessary to compete in the marketplace, the acceleration of competitive 4G networks as well as the inability to access iconic wireless devices," the company said in a statement.

Cox initially launched its wireless service in 2010. The company launched the service in less than 50 percent of its footprint, but it wouldn't say how many customers had signed up for the mobile phone service. Some of the areas that the service was offered including parts of Virginia, Nebraska, Southern California, Oklahoma, and Rhode Island.

It's not surprising that Cox would abandon its wireless phone service. In March, the company dialed-back broader plans to use spectrum it had acquired in Federal Communications Commission auctions to build out its own 3G and eventually a 4G wireless networks. At the time, the company said it was discontinuing its 3G network build-out plans to instead focus exclusively on reselling Sprint's service.

Cox has tried to get into the wireless market in the past. In 2005, Cox, Comcast, Time Warner Cable, and Advance/Newhouse Communications formed a joint venture with Sprint Nextel called Pivot, which was supposed to develop wireless services that the cable operators could bundle and resell to their customers. Three years later, the Pivot brand was essentially dead.

Still, cable companies continued their interest in wireless, and the Pivot partners banded together in 2006 to form Spectrum Co., a holding company that bid on and won significant amounts of spectrum in the FCC's AWS auction. Cox was the only one of the four cable operators that formed Spectrum Co. to announce plans to use the spectrum to build its own wireless network to cover its cable footprint.

Instead of building their own networks, other cable operators have invested in other companies building wireless networks. Comcast and Time Warner have each contributed funding to Clearwire, which has been building a 4G wireless network using a technology called WiMax. Both Comcast and Time Warner Cable resell the 4G WiMax wireless service. But there is no indication that service has been that successful. And with increased competition from Verizon Wireless's 4G LTE network, Clearwire is struggling to fund the build out of its network.

It's clear that building, owning and marketing a wireless network is not easy. And even reselling service in the highly competitive wireless market is also challenging, as Cox can attest. For now, it's unclear what Cox and other cable companies will do in terms of forming a wireless strategy.

Cablevision, Time Warner and Comcast have been offering Wi-Fi as an extension of their home broadband service to subscribers in heavily trafficked public areas like train stations. Cox may also introduce a more aggressive Wi-Fi plan. Other than that, it looks like all the major cable operators are still on the sidelines figuring out their next move in wireless.