Charter Communications’ $66bn acquisition of fellow US cablecos Time Warner Cable (TWC) and Bright House Networks is likely to result in a new wireless operator, harnessing huge numbers of WiFi hotspots and homespots to compete with Comcast’s similar strategy – and potentially to disrupt the mobile carriers.
France’s Free Mobile is a clear example of how a wireline triple play provider can use the cost efficiencies of WiFi, backhauled by home and enterprise lines, to reduce the costs of a full quad play and undercut the MNOs. In justifying its approval of the Charter deal, US regulator FCC acknowledged that the combined entity was likely to pursue a wireless plan, by expanding public WiFi and possibly through an MVNO deal.
In a lengthy document, the regulator outlined how WiFi could be used by the merged cable giant to create challenges for the MNOs. Charter, TWC and Bright House “contend that the transaction would enable New Charter to be a new entrant in the mobile wireless market by offering mobile products through increased WiFi deployment, the deployment of licensed spectrum or a mobile virtual network operator (MVNO) arrangement – and likely through some combination of these,” the FCC wrote.
As part of the acquisition proposal it filed last year, Charter pledged to build 300,000 public Wi-Fi hotspots within four years of the closing of the transaction. Bright House has deployed 53,000 publicly available WiFi access points “mounted either at outdoor locations or indoors at the premises of small-to-medium businesses,” the FCC said.
TWC has also been building out WiFi, and both companies are members of the Cable WiFi alliance, a group formed by several cablecos, also including Comcast, Cox and Cablevision, in 2012 to support roaming between their respective hotspots. Charter was not part of that group and has been less aggressive about WiFi, though it has deployed an undisclosed number of hotspots in small-to-medium business locations in the St. Louis market.
The deal creates the nation’s second largest cable operator with 24m customers, and it now only requires regulatory approval from the California Public Utilities Commission, which could be forthcoming within days.
Comcast, still the cable market leader, has said it will activate its MVNO agreement with Verizon this year and is likely to test new services in the second half of the year – probably WiFi-first, with the Verizon LTE network providing connectivity when WiFi is out of range. Comcast said this week that it was experiencing a dramatic increase in traffic on its Xfinity-branded WiFi network – 445.8m gigabytes last year, up from 74.8m in 2014 and 6.9m in 2013. Xfinity WiFi users engage in an average of 150 sessions per month, and connect an average of two devices per person. That means, the firm says, that it handles 9% of all the mobile data traffic offloaded to WiFi networks in the US – which puts it in a strong negotiating position when it comes to discuss MVNO deals and other relationships with the MNOs.
Comcast is also likely to bid in the 600 MHz auction this year, which would bring it back into spectrum ownership, which it gave up when it sold its airwaves to Verizon. It is also continuing to expand its WiFI coverage and capacity, sometimes in unusual ways. For instance, it announced this week that it was working with Ericsson to deploy cargo vans equipped with WiFi access points in order to provide WiFi connectivity, under its core Xfinity brand, in temporary networks for community activities, sporting events and emergency response.
“Comcast manages the world’s largest WiFi network and we continue to look for innovative ways to provide consumers with access to Xfinity WiFi in even more places,” said Eric Schaefer, Comcast’s general manager for communications, data and mobility.
Ericsson said the cableco was its first customer for ‘WiFi On Wheels’, which is based on customized Ford Transit 350 cargo vans outfitted with six APs, capable of supporting up to 2,500 people at a range of 500 feet. The vans have multiple access connections, non-line-of-sight (NLOS) microwave backhaul, on-board back-up power and modular deployment elements “that enable Comcast to launch operations in minutes”, Ericsson said.
“The WiFi on Wheels solution is able to provide WiFi service without the constraint of site construction, as the van itself supports an optional wireless link for backhaul connectivity,” it added.
This is effectively a WiFi version of the well-established cellular solution to temporary connectivity requirements, the cell on wheels (CoW). Some small cell vendors are proclaiming the end of the CoW with systems, such as Parallel Wireless’s virtualized local RAN, which can be deployed very rapidly and without truck rolls.
Another cableco, Cox, is less certain of its mobile future. Kelly Williams, VP of strategic video platforms, said at this week’s INTX cable trade show that the firm is evaluating MVNO services but has not yet made a decision. “We’re keeping our options open,” he said, though he acknowledged that the mobile industry’s recent shift from subsidies to handset instalment plans made a launch far easier for a cableco.
Cox bought large amounts of spectrum during several FCC auctions and even built a small 3G network in 2010, aiming for an early quad play move, but it shut that down a year later, citing its lack of economies of scale, and it then sold its spectrum to Verizon. Cox remains independent in a rapidly consolidating market – as well as the Charter acquisitions, French group Altice is engaged in bids for Cablevision and Suddenlink.