Cable's Chance to Get Mobile Right

Cable companies are buzzing about MVNOs and carrier-grade WiFi.

Mari Silbey, Senior Editor, Cable/Video

October 26, 2015

8 Min Read
Cable's Chance to Get Mobile Right

Cable has a rocky history in mobility. From failed partnerships to the release of spectrum that MSOs couldn't capitalize on, cable operators aren't a model of mobile success. However, a surge in WiFi innovation has renewed the industry's interest in mobility, with the added twist that US cable operators may once again be considering a mobile virtual network operator (MVNO) approach.

Evidence mounts for the cable MVNO
Liberty Global Inc. (Nasdaq: LBTY) CTO Balan Nair made a joke at the SCTE Cable-Tec Expo in New Orleans earlier this month that to know what's coming next at Liberty, all anyone has to do is look at Comcast's agenda and guess that Liberty will soon follow suit.

"Whatever you see Tony build," said Nair, referring to Comcast Corp. (Nasdaq: CMCSA, CMCSK) CTO Tony Werner, "I'm going to copy it."

The joke has a basis in truth because Nair has worked closely with Werner in the past and has often followed the same playbook, right down to collaborating on the RDK Management LLC joint venture, which has created a common IP video software stack for cable set-tops.

However, in the case of mobile, Nair may be paving a path for Comcast to follow. The UK-based cable operator has launched MVNO service in eight markets, and it reported 4.5 million subscribers as of the end of June. According to Nair, Liberty will have more than 8 million mobile subs by the end of the first quarter.

Nair has learned a lot from previous mobility attempts. Citing four different approaches to mobile service, Nair talked about the economic disadvantages of building out your own mobile network, and the operational difficulties operators face in trying to run a "light" MVNO model where someone else controls the SIM card. Nair's preference is for the other two mobile models: buying out an existing mobile service, or running a full MVNO where the cable operator builds out the core network and controls the SIM card, but rents radio access by leasing the mobile base stations.

With the MVNO approach, Nair also recognizes a huge potential role for WiFi. In fact, he said that Liberty is working on developing a WiFi-first device that would seamlessly hand off to a cellular network when WiFi access isn't available. Liberty is hoping to have that product ready in about a year. (See Liberty Global to Try WiFi First.)

Want to know more about cable's wireless ambitions? Check out our cable WiFi channel here on Light Reading.

And that brings the story back around to Comcast. Comcast has been exceedingly aggressive in building out its WiFi presence and boasts more than 11 million hotspots across the country. But the primary focus for this wireless network today is guest access to WiFi in people's homes, not on creating a new mobile service that Comcast can charge money for and package in a quad-play bundle. In order to launch a true mobile service, Comcast would need something more than its WiFi footprint. It would need access to a cellular network.

It's a reasonable assumption that if Comcast wants to offer a mobile service, it will follow the same strategy as Liberty Global and pursue an MVNO model. Not only do the two CTOs tend to be close in their thinking, but Comcast already has an MVNO option available to it. In 2012, Comcast, Time Warner Cable Inc. (NYSE: TWC) and Bright House Networks jointly owned mobile spectrum assets, which they then sold to Verizon Communications Inc. (NYSE: VZ) in exchange for the ability to partner with the telco in an MVNO relationship.

Critically, Verizon now says that it's been told that the cable companies will execute on that agreement. Details on what that execution might look like are scarce, but the fact that Verizon CFO Fran Shammo mentioned the news in an earnings presentation suggests a move in the MVNO direction may not be far off. (See Verizon Tips Comcast Wireless Service.)

The US cable industry's interest in MVNOs is also supported by vendor buzz at the recent Cable-Tec Expo. At Light Reading's Winning with WiFi breakfast event at the show, Alcatel-Lucent (NYSE: ALU) Senior Director Jeffrey Valley said he thinks cable companies will look at creating a mobile service again specifically because of the MVNO option. In that model, Valley noted that customers can keep one IP address while moving back and forth between WiFi and LTE.

Jeff Templeton, director of sales engineering for NetScout Systems Inc. (Nasdaq: NTCT), agreed. He said he believes that consumers ideally don't want to have to manage two data services and would rather bundle them as one. He noted that launching an MVNO service also gives cable operators a chance to sell phones and to own the quad play.

Ericsson AB (Nasdaq: ERIC) Vice President Solomon Israel was perhaps the most explicit in a later conversation. He pointed out that both AT&T Inc. (NYSE: T) and Verizon have very clearly stated that their strategy is to combine media and mobility, and that cable companies want to compete on the same playing field. Israel said that Ericsson is starting to see MVNO conversations take place among the cable operators, and that there has even been some discussion about possibly trying to purchase spectrum again.

However, Israel also emphasized that mobility in the cable industry starts with WiFi. And that's where the combination of WiFi and cellular begins to make sense.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

Making the MVNO Model Work with Carrier WiFi

The cable industry has made significant progress with WiFi in the last several years. The push to develop carrier-grade WiFi – or WiFi that behaves more like a cellular network – has led to, among other things, the deployment of Passpoint, which makes it possible to move seamlessly between wireless hotspots without repeatedly having to log in.

In Time Warner Cable's case, Vice President Robert Cerbone noted recently that Passpoint, also known as Hotspot 2.0, is enabling its customers to transition back and forth between hotspots hosted by TWC and those hosted by corporate partner Boingo Wireless Inc. . In other words, the use of Passpoint has made it easier for Time Warner Cable to extend its WiFi coverage. According to Cerbone, Time Warner Cable now has better than 40% of it WiFi customers accessing wireless Internet through a Passpoint SSID. (See TWC's Cerbone Explains WiFi Moves.)

TWC has also learned a number of best practices after years of operating hotspots. For example, the company creates heat maps of mobile usage in public areas to determine where new hotspots should be located. And to improve the on-boarding procedure, Time Warner Cable has started embedding a certificate in its apps that triggers a message asking users if they want to use TWC WiFi. After users sign in once, their devices automatically connect to any Time Warner Cable hotspot going forward.

Asked if there's a good way to monetize WiFi based on recent improvements, Cerbone was adamant that improved customer retention is a form of monetization.

However, Cablevision Systems Corp. (NYSE: CVC) has taken things a step further. The New-York-area cable operator launched a WiFi-only calling service called Freewheel in January giving existing customers access to WiFi calling on a Moto G smartphone for $9.95 per month. Consumers who aren't traditional Cablevision subscribers can sign up for $29.95 per month.

The Freewheel service is limited today, but if it were able to default to a cellular network when the WiFi signal was weak, it could gain significant value as an alternative to the average cell phone plan. (See Cablevision's New WiFi Try – Freewheeling Enough?.)

Steve Harris, senior director of advanced network technology for the Society of Cable Telecommunications Engineers (SCTE) , pointed out at Light Reading's WiFi breakfast event that integrating WiFi and cellular service will get easier once wireless carriers convert to voice-over-LTE (VoLTE). Once that happens, users should be able to roam between different types of networks, using free WiFi when the signal is strong and switching to LTE when WiFi is weak.

The implications for combining WiFi with an MVNO cellular service are huge, particularly if cable operators can further expand their WiFi coverage through efforts like the Cable WiFi initiative. Companies that are part of the Cable WiFi consortium allow joint roaming across each other's WiFi hotspots. If that initiative continues to grow as expected, it will create a footprint that is nearly national in its reach. Paired with a cellular service for back-up, WiFi would become a viable competitor for mobile subscriber dollars.

Laying aside its potential, cable WiFi is not without its challenges. There are serious limits to quality-of-service controls today, and cable operators will need to educate consumers about WiFi calling benefits while also setting up new billing and operating systems. (See How to Monetize WiFi (Part 1).)

But those issues are solvable, and they're getting both attention and development resources from the cable industry. The carrier-grade story is very important," declared Harris.

It is indeed, and if merged with MVNO service, it could be cable's way of finally succeeding in mobile.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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About the Author(s)

Mari Silbey

Senior Editor, Cable/Video

Mari Silbey is a senior editor covering broadband infrastructure, video delivery, smart cities and all things cable. Previously, she worked independently for nearly a decade, contributing to trade publications, authoring custom research reports and consulting for a variety of corporate and association clients. Among her storied (and sometimes dubious) achievements, Mari launched the corporate blog for Motorola's Home division way back in 2007, ran a content development program for Limelight Networks and did her best to entertain the video nerd masses as a long-time columnist for the media blog Zatz Not Funny. She is based in Washington, D.C.

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