Cablecos deploy a range of tactics to try to repeat the Iliad effect

Cable companies across north America and western Europe are becoming increasingly ambitious in targeting quad play services which will pitch them against the telcos and mobile operators. WiFi hotspots and homespots have been a key weapon, to build wireless capabilities cost-effectively and build new services on the existing in-home footprint. Now cablecos are eyeing MVNO deals, small cells and value-added services to differentiate themselves and seize market share, with their sights set on the kind of disruption that cable operator Iliad unleashed in France with the launch of its Free Mobile provider.

In the US, leading cablecos Comcast and Charter Communications have signed a cooperation agreement to accelerate the launch of mobile services, based on extensive WiFi and their MVNO deals with Verizon. Both have expressed interest in deploying small cells, which will enable them to operate ‘heavy MVNO’ services, in which they roll out and run their own infrastructure in homes and businesses, courtesy of WiFi/cellular access points and, potentially, shared spectrum such as the CBRS band in 3.5 GHz.

Charter is taking a step in that direction – which has been discussed since the days of the WiMAX and Pivot alliances with Sprint – with small cells which would be embedded in its home gateways. The cableco is developing the technology itself, with a view to offloading mobile activity from the Verizon macro network onto its own localized subnets, where it could then optimize and monetize the traffic and support its own differentiated services and quality of experience. In addition to giving it control of the customer experience and choice of services, it would reduce the traffic on the macro, for which it would have to pay fees to Verizon.

Craig Cowden, SVP of wireless technology, said that future in-home devices would integrate a WiFi router, small cell, cable modem and IoT radios to support smart home options.

“In the future, and actually not very far into the future, we’re going to have a wireless convergence device in that home,” Cowden said at the recent Wireless Global Congress in New York, run by the Wireless Broadband Alliance. “So it’s not just WiFi. We’ll put in LTE small cells in that same device. We’ll put IoT radios in that same device. Eventually … we’ll put millimeter wave small cells in that same device.”

This sees Charter seeking to diversify the services and revenue streams it can support on its existing infrastructure, particularly using its HFC and fiber estate to backhaul small cells and other access points. It will launch its full mobile service in the second quarter of next year, while Comcast’s Xfinity Mobile is already available.

Referring to the CBRS spectrum, which promises a free source of high capacity bandwidth for companies which do not own licensed airwaves, Cowden said Charter is testing the maturity of the ecosystem and trialling 3.5 GHz small cells in Charlotte, North Carolinaand Tampa, Florida. These trials involve eight small cell vendors (four in each market), covering a total of 400 sites. Charter is testing mobile hand-off within and between single-vendor clusters but the eventual aim is to support multivendor small cell networks, which would significantly improve the economics of the subnets.

Cowden said that, in future, Charter will also integrate small cells into fiber node sites. These are densifying at a similar rate to that envisaged by MNOs for areas of high usage such as downtown city areas and business campuses. The US cablecos predict at least an eightfold increase in nodes over the next few years, while MNOs believe they will need at least 10 times more cell sites in urban areas. There is a clear collision of interests here, which could lead to the cable operators holding a significant place in the mobile value chain by providing site and neutral host services to MNOs and other network deployers – or by harnessing them to become major mobile players in their own right.

Another way that cable operators can seek to enhance their place in the value chain is by offering premium services, especially for the enterprise space. In the UK, Virgin Media Business has launched its Business Anywhere offering, which allows mobile or remote workers to access their company VPNs (virtual private networks) from their smartphones. The service, which will go live in January, aims to make mobile working far easier and so facilitate the mobile-first strategies which many companies are adopting – but which are often hindered by ease of use or security issues.

“This new system does away with time-consuming and awkward verification processes, replacing user authentication with automatic SIM card authentication,” said Virgin’s announcement. “Once activated, the SIM creates a direct link into a company’s IPVPN using part of the existing wired line. Mobile data is routed automatically into this private network, removing the need to log-on or for the user to manually verify the device.”

“We know that businesses want simple, secure IT solutions that just work,” said Rob Orr, executive director of sales at Virgin Media Business. “Business Anywhere … sets a new standard for remote working by allowing people to carry their corporate network with them wherever they go.” The new service uses the EE network for the VPN connection, so while it may increase the MVNO fees Virgin has to pay its mobile host, it could also help to establish Virgin as the primary customer relationship with a high value set of clients.

Moves like these, to enhance the quality and variety of fixed/mobile services cablecos can offer under their own brand, could make them serious challengers to the incumbent MNOs and telcos. This has been seen since Free Mobile launched in France in 2012, sparking price wars, new levels of competition and consumer choice, and a wave of mergers and cutbacks among the existing operators.

In its recently announced third quarter results, Free’s parent Iliad was boosted by the addition of a further 250,000 mobile subscribers. Free attributed the quarter’s user growth largely to its Free Mobile Plan, which offers unlimited calls and texts, 25GB of data, and roaming, for €19.99 a month.

Iliad said the net additions left with almost 13.4m mobile subscribers in total, and were the highest number of net adds in France for the twenty-third consecutive quarter. The operator ended the period with an 18.7% share of the mobile market.

The company said 50% of its subscribers now have access to 4G, amounting to 7.4m 4G subscribers in total, while it also reported a “record-breaking quarter” for fiber-to-the-home connections, with 64,000 new subscribers, in addition to 27,000 new broadband and ultra-fast broadband subscriber additions.

On the back of the strong subscriber gains, Iliad reported a year-on-year revenue rise of 5.3% to €1.24bn, with mobile revenue increasing by 6.3% to €554m. Iliad did not provide a Q3 earnings figure.