The disruptive potential of the WiFi-first (and even WiFi-only) models have already been seen in early deployments by start-up MVNOs such as Republic Wireless, and some cable launches on both sides of the Atlantic (Cablevision, Free Mobile in France, Liberty’s Ziggo). There has been a sense, however, that these are the outriders, and behind them are really big cable and telco players, determined to become serious wireless operators in their own right.
That moment is fast approaching, with Liberty Global and Comcast both becoming far less cautious in their statements about WiFi in the past week or so. However, compared to some of the discussions of recent times, about how far cablecos could cut the MVNO ties entirely, the real world plans look set to keep the licensed spectrum networks deeply involved – just with the cable firms in the driving seat.
While Cablevision is pursuing WiFi-only (and if it succeeds, others will surely follow, but that remains uncertain), the other major US cable providers look set to activate their dormant MVNO agreement with Verizon at last, indicating that, for all their massive build-out and roaming activities for WiFi homespots and hotspots, they still need a cellular element to support wide area mobility and high-QoS services.
On the US side of the pond, Verizon apparently thinks it is better to keep its erstwhile cable partners, and their many customers, on its wholesale network, rather than Sprint’s. Sprint was traditionally the cablecos’ spectrum and network ally, but the big four – Comcast, Time Warner Cable, Cox and BrightHouse – defected to Verizon when they agreed to sell their AWS spectrum to the telco in return for an extensive cross-sales agreement and MVNO deal. The sales deal later foundered on conflicts of interest, but in theory the MVNO framework survived, though no MSO has yet acted on it.
It seemed that the cablecos might have preferred to go mobile via T-Mobile USA or a return to Sprint, or better still (like Google’s Project Fi) through MVNOs with both of them. But, while Verizon might have raised the ‘per-minute’ price of a cableco’s MVNO deal, to a point where T-Mobile and Sprint were more attractive, it now appears, after comments from Verizon CFO Fran Shammo, that it will support the cable alliance after all. Because Charter is buying both TWC and Bright House, it can presumably share too.
The comment which triggered this discussion occurred in the analyst call around Verizon’s Q3 results, in which Shammo confirmed that Verizon has an existing MVNO agreement with the cablecos and that he has been informed that they are going to execute on that agreement.
He refused to be drawn into a discussion about whether nor not the cable companies had insisted on renegotiating some terms of the deal, but that was widely reported in the July timeframe by the Wall Street Journal and others. That renegotiation was around ‘shared data plans’, something the Verizon did not have at the time, and it makes sense that they may have been introduced into the agreement.
“Obviously the industry is moving. Cable will do what they are going to do and we will do what we will do,” Shammo said. He also implied that the MSOs would be WiFi-first, with cellular merely as a fallback when a subscriber was out of WiFi range. He emphasized that Verizon saw WiFi as complementary to LTE, and not a replacement, which many took as shorthand for the idea that the cablecos would not compete with the MNOs but go a WiFi-first route, with different propositions and pricing.
Analysts at New Street Research expect Comcast to launch a market trial of a WiFi-first service soon, with a commercial launch in about a year’s time. Last year, the same analysts predicted that a WiFi-first cable offering could capture 9% of the retail wireless subscriber market in the next five years and boost cable revenues by 10% to 12%, with the more price-sensitive MNOs – Sprint and TMO – most at risk (another reason for Verizon to encourage, not fear, its MVNO deal).
In Europe, Liberty Global is putting more details behind its earlier statements that it could create a pan-regional WiFi-first offering to disrupt the mobile market and support an affordable route into the quad play for its cable subsidiaries in the UK, Germany, The Netherlands, Belgium and other markets. Its units in the last two of those countries already have extensive homespot roll-outs, which could be harnessed to expand WiFi coverage at low cost, and have offered some WiFi-first trials and services. The UK-based Virgin Media subsidiary recently announced plans for a significant homespot build-out in a market where there is a race to the quad play, with large-scale consolidation and deployment behind it.
Now, Liberty aims to have a WiFi-first mobile offering launched by year end in some areas, CTO Balan Nair told the Cable Tec Expo, even as the firm issues RFPs for fiber build-out to pass another 10m European homes (30% of them fiber-to-the-home). This is the latest element in the company’s pan-regional Project Lightning.
Nair said that Liberty is seeing success with the quad play, and believes WiFi will be an integral part of it, to increase availability and support usage on the move. The company currently has between 3.5m and 4m MVNO subscribers in Europe. He added that offering a quad play reduces churn, and there are four ways to achieve it – “build it, buy it, go the light MVNO approach, or build a core and rent base stations”. He said: “We’ve done all four. Building sucks.” But he said the light MVNO approach was even worse because it was little more than a reseller role with no control over costs, pricing or when to migrate customers to a new network. SO the best option is to build the core and lease the base stations, while including as much WiFi as possible. “You have to control the SIM card, so you can move to any carrier,” he said.
This need for control may explain why Liberty has become keen on acquiring cellular operators for itself. Its Belgian Telenet unit bought Base from KPN, and it could even acquire the main KPN firm, in Holland (see separate item), while it has been linked on many occasions with Vodafone. Although the companies recently said they had, despite talks, failed to find a deal that worked, few doubt they are still in conversations behind the scenes, whether about assets swaps or sharing, or about localized mergers (Vodafone UK and Virgin Media, perhaps, as a response to the BT/EE quad play-inspired merger plan, and with fewer regulatory obstacles than a full marriage).