MSOs Tie Wi-Fi Knot, but Biz Models Remain in Flux

Michael Coyne, VP, mobile broadband strategy, Ericsson

Michael Coyne, VP, mobile broadband strategy, Ericsson

May 29, 2012 – Major cable MSOs took another major step forward in plans to extend operators’ broadband advantage beyond the home by completing the roaming agreement that will allow subscribers to connect to cable-owned Wi-Fi hotspots wherever they are. But how far they intend to go in exploiting the Wi-Fi advantage remains to be seen.
 
The agreement makes official the involvement of Cox Communications in the ambitious strategy, bringing to five the number of MSOs in the Wi-Fi coalition amid signals that many more will join the effort to build a national wireless footprint. As previously reported (May, p.1), a number of initiatives involving technology innovations, accelerating Wi-Fi build-outs and business deals are fueling hopes in some quarters that the framework for a coast-to-coast cable Wi-Fi footprint might be in place by summer’s end.

For now, the deal involving Comcast, Time Warner Cable, Cox, Cablevision and Bright House Networks encompasses more than 50,000 hot spots in New York City and the surrounding Tri-State area, Los Angeles, Tampa, Orlando, and Philadelphia. The partners said they intend to expand into many more cities without naming locations.

“We’re starting to build out Wi-Fi in places where people congregate,” said Time Warner Cable CEO Glenn Britt during a session at the Cable Show in Boston. These high-traffic locations include shopping districts, cafes, malls, arenas, restaurants, parks and beaches..

Buttressing efforts to build public awareness for this first phase of deployment the five MSOs have set up a Web site, www.cablewifi.com, with maps customers can reference to locate hot spots across all the participating companies’ networks. A network identifier – CableWiFi – will appear when customers are looking for a Wi-Fi connection in an area served by one of the cable partners, allowing them to sign in on other providers’ networks in the same way they do on their home provider’s hotspots. Eventually users will be able to authenticate devices for automatic connection to any CableWiFi hot spot, the partners said.

The first implementation of the CableWiFi network identifier is to be found on Bright House and Cablevision networks in New York City and central Florida. The partners said the identifier will be implemented throughout their footprints over the next few months.

For now, the industry’s focus will be on enhancing the appeal of their broadband service through the convenience of multi-partner Wi-Fi roaming. After all, as Britt noted, “Most data usage is WiFi, not cellular frequencies.” Or, as Nomi Bergman, president of Bright House, put it, “This effort adds great value to our high-speed Internet customers by providing free wireless Internet access on all of their Wi-Fi enabled devices in our markets and additional areas across the country.”

Along with adding new cities served by current partners to the roaming agreement executives made clear they’re looking to bring in new partners. For example, John Pascarelli, executive vice president of operations at Mediacom, told an audience at the Cable Show his firm has “no doubt” other operators will be invited to join “when the time is right.”

But where things go beyond this first phase remains unclear. Statements attributed to the partners in the roaming agreement press release reflected a range of perspectives, from cautious to aggressive, which sources report underlie uncertainties as to how the advanced carrier-grade Wi-Fi capabilities tied to cable HFC networks will ultimately be leveraged.

At the cautious end of the spectrum, Cox COO Jill Campbell commented, “The way customers are using our service continues to evolve. This is a new area of opportunity that we need to explore.”

Not surprisingly, the most aggressive posture was evinced by Kristin Dolan, senior executive vice president of product management and marketing at Cablevision, which has the densest Wi-Fi footprint in cable. “We believe that Wi-Fi is a superior approach to mobile data, and that cable providers are best positioned to build the highest-capacity national network offering customers fast and reliable Internet connections when away from their home or business broadband service,” Dolan said. “We’ve built an extensive Wi-Fi network in our own service area, and see real value and potential in other leading providers joining with us to extend that connectivity to major markets across the country.”

Mobility is now clearly an option with carrier grade Wi-Fi, noted Michael Coyne, vice president of mobile broadband strategy at Ericsson, which recently purchased BelAir Networks, one of the leading providers of carrier-grade Wi-Fi infrastructure. But it remains to be seen how these capabilities will be utilized by cable operators.

“I don’t ever foresee Wi-Fi being an alternative to mobile as a heterogeneous network,” Coyne said in an interview. “But using mobility on Wi-Fi in conjunction with an MVNO deal makes a lot of sense.”

The reference is to the fact that if a cable operator in a mobile virtual network operator deal with a cellular carrier creates a mobile-capable Wi-Fi footprint that fully covers certain areas, that operator’s mobile customers would remain on the Wi-Fi network most of the time, minimizing the costs the operator would have to pay the cellular company for customers’ usage of the cellular network. Moreover, the higher data rates available on the Wi-Fi network give the cable operator a differentiation advantage over traditional cellular, Coyne said.

Mobility aside, the fundamental issue for the CableWiFi partners is whether they can find a business model that justifies more aggressive build-outs beyond coverage of high-traffic areas.
“It’s an open question as to how big the build-outs will be,” Coyne said. “The business case is evolving.”

Citywide coverage may require monetary justification beyond making cable broadband more appealing to subscribers. Maybe the model entails charging carriers for offloading cell traffic, or maybe there’s a value-add charge that can be affixed with features such as an “express lane pass” subscribers might enjoy by virtue of having ubiquitous access to cable Wi-Fi throughout a metro area.

For Comcast, at least, the goal appears to be to maximize the benefits of the evolving relationship with Verizon Wireless rather than pursuing an aggressive Wi-Fi build-out plan. Sources say the MSO is one of the least enthusiastic about achieving contiguous metro coverage, preferring instead to rely on the LTE network to provide subscribers local mobility with the added advantage of Wi-Fi broadband whenever they find themselves in hot-spot range.

“Mobility is an increasingly important part of our Xfinity services product roadmap,” said Comcast Cable COO Dave Watson, “Wi-Fi technology, coupled with our agreements with Verizon Wireless, are two significant ways we are executing on our strategy to deliver the best in- and out-of-home communications experience for our customers.”

At the Cable Show Verizon Wireless unveiled a new video portal app, “Viewdini,” which displays all the video options available on the LTE network, including premium content from Comcast, the first announced cable partner for the app.

“We have a partnership with Verizon Wireless that has been a terrific partnership for us,” said Comcast Cable president and CEO Neil Smit, in an appearance with Verizon Wireless president and CEO Dan Mead at the Cable Show. “We felt that as the content becomes more mobile and people want to consume it in different places, different content whenever or wherever they want to, that Verizon Wireless would be a great partner to help our customers discover the content.”

Part of the deal in the MSO’s sale of AWS spectrum to Verizon Wireless was they would promote the carrier’s mobile service to their subscribers, at least until they develop their own branded mobile services through MVNO affiliations with the carrier. According to press reports, those promotions have begun in Comcast, TWC and Cox territories.