Signs of the times in US cable – Comcast may soon have more internet than TV subscribers; Cablevision plans to prioritize WiFi over the TV business because of the latter’s rising costs and falling margins. That will make the cable providers even more determined to invest in a wireless network they can control – WiFi, rather than cellular MVNO deals – in order to fill out their quad plays, tipping the mix of those four-way bundles towards the higher profits of wireless data, and stealing some of those profits from the mobile carriers along the way.
Cablevision, as so often with US cable WiFi, has led the way in disruptive launches, even though Comcast is the biggest deployer of hotspots and homespots (the pair, along with Time Warner Cable, Cox and BrightHouse, are also part of the huge CableWiFi hotspot roaming alliance, helping them extend their national reach to almost cellular scale in some areas). The New York-centered cableco launched its Freewheel WiFi calling and data service earlier this year and CEO James Dolan said that, even in the early weeks, the firm was seeing usage outside its cable footprint – an important objective of embracing WiFi, even though it may also create conflicts of interest with the CableWiFi partners.
The service costs $9.95 a month for existing Optimum Online subscribers and $19.95 for non-Cablevision customers and currently runs with one handset, the Moto G, priced at $99.95. Unlike WiFi-first offerings like that of Scratch Wireless, this is a WiFi-only option.
“Freewheel will be a disruptive force to the cellular industry,” Dolan said, adding that it was just “the first in series of new products and services we intend to launch to improve our relationship with our customers”. And while Comcast has remained coy, so far at least, about possible clashes with mobile operators, Dolan was not paying any lip service to the myth that the two networks and provider types are complementary.
“Nobody is building connectivity using cellular,” he said. “Everybody is using WiFi. WiFi is a much more efficient, effective way to deliver data between device and server. In my opinion, the die is cast here.”
Once Freewheel made its debut, it was only a matter of time before Comcast followed suit with a WiFi handset service and a more aggressive approach to the MNOs. However, it remains cautious about the possible impact on other areas of its business. CEO Brian Roberts said, during the cableco’s fourth quarter earnings call, that it was “still assessing the possibilities [of WiFi-first or WiFi-only]”, adding: “We do believe in the asset, and we’re looking for ways to bring it to market over the next several months.”
Neil Smit, CEO of Comcast Cable, noted that 70% of in-home mobile traffic in Comcast’s broadband households now travels over the company’s WiFi connections. “Wireless seeks wired,” he said, indicating that Comcast is seeking ways to increase the revenues from its 8.3m hotspots and homespots rapidly in 2015. Of course, the more broadband lines it can install, the more homespots it can backhaul and the better coverage it will achieve. The MSO signed up 375,000 high speed data subscribers in the fourth quarter, increasing its broadband customer base to almost 22m, up nearly 1.3m for the year and almost matching the number of its video customers.