Summary
1. Cox Communications has its cable concentration in the South and Southwest. 2. In focusing its wireless build-out in those areas of the country, it just may be able to make it in the new business. 3. The worse case scenario would probably just be feeling compelled to sell off the wireless operation.
Analysis
MetroPCS Communications just reported an additional 684,000 net new subscribers in the last quarter. Despite the bad economic conditions, Leap Wireless is also doing well. So, it is not so far-fetched that Cox could pull it off, with its introduction more likely to be during an improved economy. Whereas MetroPCS and Leap have made “market penetration of anywhere from 8% to 13% in the areas where they've been offering service for at least five years,” Cox can do considerably better with its captive base.
In targeting only its subscribers, the cable TV company can keep its marketing costs down as compared with other national carriers. It would not be surprising if Cox offers the option of either a more localized service or a national one. Lots of people are likely to decide that they only need coverage within Cox’s cable footprint. Also, it is almost certain that the MSO will have a pre-paid program. Again, as a private company it does not have to worry about reporting high churn rates.
