Light Reading

Cablevision Plots WiFi Market Disruption

Alan Breznick
5/8/2014
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Cablevision Systems is looking to use its swiftly expanding WiFi network in the New York metropolitan area to launch products that would "disrupt" the wireless data market.

During the company's first-quarter earnings call Thursday morning, Cablevision Systems Corp. (NYSE: CVC) CEO James Dolan expanded on his hints in earlier earnings calls that Cablevision is cooking up something big on the wireless front. Though he still didn't disclose any specific plans, Dolan indicated that the nation's fifth-largest MSO is working on WiFi products that "will be disruptive to the current market players," particularly in the wireless data market.

"We've been saying for quite some time that WiFi is a differentiator for our business," Dolan said. Now, with Cablevision's Optimum WiFi network boasting more than 100,000 access points and rapidly growing, "I think you're going to see new products, some of which will be disruptive."

Key to Cablevision's plans is the deployment of more powerful WiFi-outfitted "smart routers" in broadband customers' homes. Taking a leaf out of Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s book, Cablevision is furiously installing these data gateways throughout the New York region, because the gateways turn each home into a public hotspot that other broadband users can leverage.

With the deployment of these gateways, Cablevision aims to expand its universe of WiFi access points to 1 million by the end of the year. Employing a similar strategy, the much larger Comcast aims to increase its WiFi network reach from 1 million access points to 8 million by the end of the year. (See Comcast Whips Up More WiFi.)

Dolan said Cablevision has already seen the "total data passed" on its Optimum WiFi network more than double over the past year. Newly named COO Kristin Dolan (the CEO's wife) said more than 1 million "unique Optimum households" used WiFi in the first quarter, up 30% from a year earlier.

Stressing that WiFi is "an unlimited data product" for the MSO, James Dolan also said Cablevision "will continue to push that trend" and will be "aggressive in finding and rolling out new products that ride on the network." He asserted that "there's a lot more traffic that could move to the WiFi network."

The cable company is increasingly emphasizing its WiFi network for growth as, like most other big US MSOs, it continues to gain more broadband subscribers while shedding video subscribers. In the first quarter, for instance, Cablevision added 8,000 high-speed data customers while losing 14,000 video customers.

As a result, Cablevision, with 2.788 million broadband and 2.799 video subscribers, stands poised to become the third major US MSO to have more broadband subs than video subs. In a historic marker for the cable industry, both Time Warner Cable Inc. (NYSE: TWC) and Charter Communications Inc. have already made that shift, indicating that broadband really is cable's future.

In other earnings highlights, Cablevision reported that it gained nearly 8,000 voice subscribers in the first quarter, boosting its total count to almost 2.3 million. However, due to its continued video losses, the overall customer count slipped by 2,000 to just below 3.2 million.

Cablevision's consolidated net revenue climbed 4.3% from a year earlier to $1.58 billion. Consolidated adjusted operating cash flow jumped 24.8% to $434.3 million, and consolidated operating income soared 92.6% to $207.1 million as revenue rose and customer-related costs fell.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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DHagar
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DHagar,
User Rank: Light Sabre
5/14/2014 | 9:54:41 PM
Re: Cablevision Plots WiFi Market Disruption
@kq4ym, yes, I believe it will depend on their ability to execute and build that capability - sounds like a good bet.

I agree with danielcawrey, that the data capability is key.
kq4ym
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kq4ym,
User Rank: Light Sabre
5/14/2014 | 12:35:22 PM
Re: Cablevision Plots WiFi Market Disruption
If they can indeed expand from 1 million to 8 million hotspots in a short time, that may very well bode well for Cablevision. Whether the investment in infrastructure and new equipment will bring in enough income remains to be seen, but it seems like a gamble worth taking for some possible quick growth.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
5/10/2014 | 2:30:50 PM
Re: Ubiquitous wifi has been touted as disruptive before, but....
People need data more than they need cable-fed content at this point. Data has rendered content through traditional pipe relatively worthless. I think that wifi offers a great value play, however it requires significant investment because coverage is key. 

I know that there are times when I am automatically connected to wifi hotspots from carriers like Verizon when I am out and about. But the fact of the matter is that I would much rather use my phone's tethering - it's just a more consistent connection when I am on the go. 
DHagar
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DHagar,
User Rank: Light Sabre
5/9/2014 | 6:00:53 PM
Cablevision Plots WiFi Market Disruption
@mhhf1ve, I am with you - I think you have very good points!  I truly believe those iterations are not breakthrough disruptions.  If, however, they have developed a new core network capability that creates new capabilities in their platform, that could be disruptive.  But the proof will be in their deliverables and we will know if it is disruptive or not.
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
5/9/2014 | 5:53:33 PM
Re: Cablevision Plots WiFi Market Disruption
DHagar, Maybe disruption is just too overused to try to create buzz. A vast wireless network built from WiFi devices has some potential to do things that might not otherwise be available... but it's unclear how valuable those things are compared to existing wireless services. Maybe I'm just not creative enough to see the full potential. But I have seen plenty of municipal wifi networks come and go... and I haven't seen any vast decrease in wifi hardware prices or a quantum increase in wifi performance? 
DHagar
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DHagar,
User Rank: Light Sabre
5/9/2014 | 4:06:09 PM
Cablevision Plots WiFi Market Disruption
@mhhf1ve, I like your healthy questioning of the disruptive claim.  I am seeing that the potential disruption may come from their network, enabling them to compete with new capabilities, services, etc., more than from the user end.  What do you think?

Obviously, time will be the ultimate proof - and we know where we heard the possibility of smokescreens first!

 
brookseven
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brookseven,
User Rank: Light Sabre
5/9/2014 | 1:00:03 PM
Re: Ubiquitous wifi has been touted as disruptive before, but....
 

I have a home Cisco Router (okay Linksys) that has WiFi and a built in guest network.  So not much new there.

I have T-Mobile on a G3 and WiFi calling.  The advantage of VoWiFi is inbuilding coverage compared to Cellular in a lot of places.

I dropped having Cellular on my Tablet and I use my phone as a hotspot if I am ever out of WiFi while working on my tablet.

I am on Comcast and see their hotspots sometimes but don't really get great connectivity out of them.

I just think WiFi is what I use when I sit down...like at a coffee shop.  4G is what I use when I am on the move or on that rare occasion where WiFi is not available where I am sitting.  If WiFi were more available, i would use it more but I am not sure it would cause me to change carriers.

seven

 
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
5/9/2014 | 12:47:42 PM
Re: Ubiquitous wifi has been touted as disruptive before, but....
Wireless voice over wifi might save users some prime time minutes, but that doesn't sound all that disruptive. Wireless carriers have tried to get people to offload their mobile usage onto their home internet service for a while, but the thing is that benefits the wireless carrier more than it benefits the end user.
CraigPlunkett
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CraigPlunkett,
User Rank: Moderator
5/9/2014 | 12:40:44 PM
Re: Ubiquitous wifi has been touted as disruptive before, but....
The addition of home routers that can broadcast multiple SSIDs is still more of a retention play than anything else.  The home router inside your house cannot reliably serve clients on the street, even in urban areas. this is because the radios in the clients on the street cannot reach back inside the house to get to the router.

However, if you do have an apartment building packed with customers, each having an independent Wi-Fi router and the channels are not coordinated, you may have those interference problems, leading to a customer support nightmare.

This is more about making it easy to put guests on your home network and have seamless connecitivity for them.
KBode
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KBode,
User Rank: Light Sabre
5/9/2014 | 12:02:44 PM
Re: Ubiquitous wifi has been touted as disruptive before, but....
I'd agree that this sounds incredibly ambiguous and it feels like there should be something else at play here. Is there going to be some kind of wireless voice service figured into the mix?
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