Cox dumps PCS operator business

Cox Communications made its final exit from the PCS operator business last week, offloading its ownership in the Southern California major trading area, which includes Los Angeles, San Diego and Las Vegas, to Sprint PCS, which already owned 60% of the market. Rather than sell its stake outright, Cox traded it for 24.3 million shares of Sprint PCS stock.

"We've moved from a strategic to a financial interest," said Dave Woodrow, senior vice president of new business development for Cox.

"We take that as a strong vote of confidence," said Tom Mateer, vice president of affiliations for Sprint PCS. He believes that Cox's decision to accept more Sprint PCS stock instead of cash reflects Cox's confidence in Sprint PCS' future growth.

The Southern California network is one of two nationwide that operate using PCS-over-cable and allowed Cox to obtain a Pioneer's Preference license-licenses the FCC awarded to companies for developing new technologies. Sanders supplies equipment for the system.

"It was a successful single offering in California," Woodrow said.

At this stage in buildout, though, it wouldn't make sense for Sprint PCS to continue using cable except in difficult-to-reach areas, he said. It's more efficient to use towers already in place because they provide broader coverage.

Timing originally prevented PCS-over-cable from taking off. After companies such as Sprint bought their licenses, they wanted to build out quickly. But if they used PCS-over-cable, they would be dependant on cable operators upgrading their facilities, Woodrow said.

The Southern California network was integrated with Sprint PCS's national network last year when Sprint PCS took 60% ownership in the market and gained operating control. The lease agreement, which allowed the Southern California venture to use Cox's cable facilities, will be assumed by Sprint PCS.

"We aren't in the PCS business nationally and we don't want to be," Woodrow said. Though the original concept of teaming with Sprint to ultimately deliver local, long-distance and wireless service didn't pan out, Cox is still confident in the PCS industry, Woodrow said.