When Verizon switched off most elements of its far-ranging joint venture with three cablecos, it highlighted how the latter group is setting itself up in the wireless business, potentially in competition with the cellcos. Almost a decade ago, when public Wi-Fi really hit the spotlight thanks to the high profile deployment of municipal metrozones in many US cities, the telcos appeared to be over-reacting badly when they started taking Wi-Fi operators to court, alleging unfair competition. At the time, the quality and mobility available from free Wi-Fi was so poor compared to mobile or fixed broadband services, that talk of Wi-Fi as a primary, rather than convenient best effort, wireless network seemed far-fetched. Now might be a better time for the operators to get worried because, while they are using Wi-Fi extensively themselves to offload unwelcome data, they are also seeing it evolve into a tool sophisticated enough to be turned against their expensively deployed 4G services.
The development of Wi-Fi/cellular hand-off standards and common management platforms will be important for the cellcos to try to establish control of Carrier Wi-Fi, and tame its disruptive potential, but these integration efforts are also going on in the cable DOCSIS community to support better handover and smooth onload. And to make matters worse for the mobile carriers, broadband providers have a readymade position in users’ homes, where most data usage takes place, and can start to turn those residential gateways into homespots ‘ private access points which allow part of their capacity to be open to passers-by, allowing for a dramatic, and cheap, expansion of the network available to subscribers as they travel about.
European fixed players like BT in the UK have flown the flag for using Wi-Fi as an alternative to cellular, while converged operators from the incumbent (Deutsche Telekom) and the disruptive (Free in France) are supplementing their LTE and hotspot installations with homespots, either their own or via a deal with the pioneer of the idea, FON. But with the major US cablecos creating a massive shared hotspot network ‘ now over 200,000 locations ‘ and potentially topping that figure up to millions via homespots, and with FON coming to the US for the first time too, it is this market where a lot of activity is going to take place in the coming months, and where we will see whether Wi-Fi really can help the cable providers establish a viable quad play alternative to the Big Two.
Comcast is the leader of the cable effort in the US and a firm believer in Wi-Fi to add value and mobile roaming for its subscribers. It now appears to think it can do without the development it previously had with Verizon, for a common set-top box and set of web content services ‘ or perhaps the two partners just ended up with too many conflicts of interest as their competitive strategies overlapped. Although, along with its Cable Wi-Fi partners ‘ Time Warner, BrightHouse and Cablevision ‘ it gave up old dreams of building a 4G network of its own when it sold its AWS spectrum to Verizon. However, it still has an MVNO deal and may push this further towards the center of its strategy, mirroring the multimode cellular/Wi-Fi build-outs of the cellcos, but with its own fixed lines and cable backhaul to sweeten the pill. Comcast is reported to be testing mobile small cells, in a revival of an idea it originally mooted in the days of its WiMAX-based joint venture with Clearwire and Sprint. Then, there was much talk of Comcast using femtocells to differentiate its services from those of Clearwire and even to run these on its own subset of the host’s frequencies. With the future of the Verizon MVNO in doubt, given recent events, Sprint may well be lurking to try to win back its old cable partners.
Meanwhile, Comcast continues to expand its Wi-Fi footprint, and therefore that of the total Cable Wi-Fi roaming base. It rolled out over 1,300 hotspots just this week across Utah and the Kansas City metro area, and now has a national total of about 60,000 locations, second only to Cablevision, which was the first of the group to embrace Wi-Fi wholeheartedly, and has never let itself be distracted by ventures into cellular (apart from basic MVNO deals).
The next step will be to penetrate the home more deeply and open up those sites to other customers to expand the footprint further. Comcast’s EVP of cable and COO, Dave Watson, told the recent SCTE Cable-Tec Expo: ‘Wi-Fi in the home is one of those unique places where cable will carve out a winning formula where we can play offense. If we pull it off the right way, it’s going to be a sustainable competitive advantage for years.’ The company has recently started rolling out homespots ‘ Cisco gateways which transmit two SSIDs, one for the secure home network, including home automation applications as well as broadband access; and the other for any Comcast subscriber within range to use.
As Watson hinted himself, this infrastructure could see the cablecos being courted not just by cellcos wanting to boost their offload potential, but by less traditional service providers such as Amazon (which plans to launch a home automation service based on its cloud, but lacks its own access network). With mobile and home devices increasingly connecting to Wi-Fi by default, the value of the cablecos’ footprint to support such third party offerings will rise and rise.
However, while Comcast is going it alone with homespots, providers will have another option with the arrival of FON. The community Wi-Fi pioneer recently signed a roaming deal with AT&T, allowing the cellco’s customers to use FON hotspots when abroad, and this has proved to be its first step to a US launch. This is beginning modestly, with FON selling its $59 Fonera router ‘ which allows private and public access to be separated ‘ directly to consumers via Amazon. Of course, if it starts to attract considerable uptake, it will be looking for carrier deals similar to those it has with companies such as Deutsche Telekom, BT, SFR, Softbank and others. Carriers are vital to FON ‘ in its global network of 12m access points, 80% come from carriers which install its software on their residential gateways under their own brand. Now, Comcast’s homespot moves suggest that the US public is also ready for shared Wi-Fi, as do open source efforts like Open Garden and Karma and FON will be looking for its first big operator deal. AT&T, given their existing roaming contract, the operator’s major investment in Wi-Fi offload, and its penetration of homes within its UVerse footprint, must be the obvious candidate.