Cable Finally Sees Money in Wireless
ATLANTA -- After all of cable's missteps in the mobile market (a certain Pivot venture comes to mind), the industry finally appears to be putting together a winning wireless strategy.
At a Light Reading Cable breakfast here this morning, panelists from Cisco Systems Inc. (Nasdaq: CSCO), Ericsson AB (Nasdaq: ERIC), Cox Communications Inc. , Buckeye CableSystem , and CableLabs highlighted some of the ways cable WiFi is helping operators retain customers and define new revenue opportunities.
With more than 200,000 public hotspots already deployed in the US, cable companies have begun to learn what works and what doesn't work in WiFi. Hotspots have proven useful largely for reducing subscriber churn, but opportunities for monetization are on the near horizon. And companies are already experimenting with ways to bring in new WiFi cash.
Beyond offering paid access to nonsubscribers, cellular backhaul may be the most obvious potential revenue generator for WiFi deployments. As mobile network operators look to relieve some of the burden of traffic congestion, cable operators can provide backhaul and mobile offload support through WiFi and even mobile small cells. Combining the two technologies will only strengthen cable's value proposition. "There's a lot of interest" in moving small cell development forward in conjunction with WiFi, CableLabs CTO Ralph Brown said. "Small cells are definitely in the future." (See: Comcast Testing Small Cells – Sources.)
On the WiFi front alone, cable operators have opportunities to bring in revenue through location-based services and analytics. Cisco senior director Jared Headley cited trials going on in the hospitality and retail industries that target advertising to mobile users based strictly on location. Those ads have a higher impact than ads delivered without real-time location information, Headley said, and cable companies should be able to capitalize on similar offerings through location awareness at their own hotspots. The issue of scale must be solved before cable operators can take full advantage of location services, but initial deployments of location-based advertising should "roll out in the next year."
Ericsson vice president Surya Bommakanti said he's seen location-based advertising trials, and he believes that arena and stadium environments are "a natural place" for those types of services to be implemented. There are a "couple of live examples today where we have been working with operators on this topic."
Headley said cable companies should also start to test WiFi analytics offerings in 2014. Metrics around foot traffic and crowd flow are valuable to venue owners, and that data could be offered as a value-add on top of WiFi service packages. Conveniently, even if a mobile user doesn't connect to a WiFi network, an operator's local access point still knows when a new device is in the vicinity. Cable companies should be monetizing that data, he said, and they will in the near future.
Until cable companies start to make real money on WiFi, they can still enjoy the benefits of reduced subscriber churn. Headley said one operator in Europe has seen a fivefold reduction in churn from its home wireline service because subscribers can access its millions of community hotspots. That's a case of the WiFi business model proving itself in the immediate term, and it bodes well for the future of cable WiFi.
US cable WiFi is still in its early stages, but the industry has come a long way since last year, when the cable WiFi SSID was first being implemented. For cable, it looks like there's money in wireless after all.
— Mari Silbey, Special to Light Reading Cable