Does Cable Have a Wireless Plan B?
If Clearwire LLC (Nasdaq: CLWR) doesn't pan out, what are the WiMax champion's cable partners -- Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC) and Bright House Networks -- going to do?
None have publicly discussed the idea of crafting a wireless plan B, but speculation that something is afoot has been swirling for weeks, with at least one of those partners, TW Cable, along with Cablevision Systems Corp. (NYSE: CVC) being linked to discussions with LightSquared . (See Cablevision Also Kicking LightSquared's Tires? and Rumor: TW Cable Talking With LightSquared.)
Another popular rumor has the MSOs with Advanced Wireless Services (AWS) holdings (Comcast, TW Cable, Cox Communications Inc. and Bright House) talking with Sprint about swapping some of that coveted spectrum for an equity stake and giving it a go from there. Sprint's not expected to offer more details about its 4G Network Vision strategy until Oct. 7. (See Cox: We're Not Selling Our Spectrum, Sprint's $13.5B Jump to LTE With LightSquared and What Will Sprint Reveal of its 4G Plans?)
"One thing they [the Clearwire MSO partners] have to do is make contingency plans ... in case Clearwire unravels," says Sanford C. Bernstein & Co. Inc. analyst Craig Moffett. Discussions about an equity-for-spectrum play could help "grease the skids" for a potential plan B, Moffett says, noting that it doesn't appear that any such deal appears to be imminent.
And he doesn't believe the cable guys are in a position to quickly pull the trigger on an strategy that involves LightSquared, which just inked network-sharing deal with Sprint but still faces regulatory uncertainty. (See Sprint's $13.5B Jump to LTE With LightSquared.)
Moffett says "it's all but inconceivable" that the Federal Communications Commission (FCC) will approve LightSquared's use of the lower L Band without further testing. LightSquared has expressed some hope it would gain FCC approval by mid-September.
"That sounds like wishful thinking," Moffett says, noting recent Federal Aviation Administration findings that GPS services will still face significant interference in the L-Band, despite LightSquared's revised plan. The situation "really ties the FCC's hands," the analyst adds. (See LightSquared Submits Plan to FCC and LightSquared Claims It Has Answer to GPS Problem.)
It's not LighSquared's fault that GPS receivers operate outside their allotted band, but that's the cards it's playing with. And it's that kind of uncertainty that could give cable pause.
That much was evident last week during TW Cable's second-quarter earnings call. MSO CEO Glenn Britt was noncommittal about what TW Cable might do with its AWS holdings, and isn't exactly pleased about WiMax subscriber growth, calling it "not terribly exciting." Comcast's next best chance to address its wireless future is Wednesday morning, when it reports second-quarter numbers. (See TW Cable Stays in Wireless Holding Pattern.)
Cablevision, meanwhile, has been enjoying success with its Wi-Fi deployment, but hints that it's considering other mobile strategies for voice and other types of mobile broadband services emerged even before the rumor spread that the MSO was in talks with LightSquared. (See Cablevision Trademarks Mobile, RS-DVR Brands.)
— Jeff Baumgartner, Site Editor, Light Reading Cable