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Cable's Chance to Get Mobile Right

Mari Silbey
10/26/2015

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

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jeff@wnsinnov.com
[email protected]
11/6/2015 | 5:28:56 PM
Cable operators are in a prime position to capitalize on WiFi-First by taking advantage of existing customer relationships
Seamless WiFi | Cellular integration is the new next generation business opportunity for broadband service providers. MVNO's can tap into a vast market for voice, video, messaging and other app enable services. Seamless carrier-class WiFi | Cellular integration significantly reduces CAPEX and can eliminate the need for licensed spectrum by leveraging WiFi as the network priority. http://www.cablenable.com

• WiFi-First cuts the cost of reselling mobile service to 1/3 of what it was. And scenarios completely using WiFi can be offered. Operators control end-to-end service enablement process, product feature set, billing (all aspects of the product and value proposition) and network. 

• Cable operators are in a prime position to capitalize on WiFi-First by taking advantage of existing customer rela­tionships, WiFi network buildout, communications infrastructure, interconnection, and expanded service offerings. This First Mover opportunity has a short window. It requires a minimal investment to deploy.  A +$5 Billion annual revenue opportunity.

• Smartphones changed the telecommunications landscape and put mobile operators in the driver's seat. WiFi is about to launch the second revolutionary change in technology and unseat them. Today MSO average household ARPU is $150 (for 3 services) while mobile service average household ARPU is $190 (for 1 service). The lucrative mo­bile revenue pie is about to splinter. MSOs have a front row seat and the best shot at grabbing the biggest chunk of that business. Each smartphone becomes a potential subscriber, not just each address since multiple devices typically exist in each home or office.

• MVNEs with specialized telecommunications interfaces allow today's MSOs to own the mobile sub­scriber phone number. All incoming and outgoing calls and messages go through MSO gateways allowing control over the delivery method (WiFi, cellular, PSTN) and the cost. Ten years ago, reselling mobile service meant using the mobile service provider's phone number. All incoming and outgoing calls and messages unavoidably went through the mobile service provider's gateways and were billable events.

• New features are available for cellular as well as VoIP service. "One Number" mobile extension, OTT Rich Messaging, reduced rates, and improved coverage are of interest to all consumers, Millennials in particular, and can stop the exodus of Cord Cutters by providing a more robust product offering and better service at a significantly lower cost.  And, being able to move seamlessly between Wi-Fi and Cellular networks is a key element of the value proposition.

• Although voice and rich messaging lead the way today, a seamlessly converged app platform will drive the value chain in the end and business opportunities of the future.. While allowing cable operators to compete with the OTT onslaught and drive additional VoIP and broadband penetration. http://www.cablenable.com
MikeP688
MikeP688
10/27/2015 | 11:54:26 AM
Choice is always a good thing.....
....Comcast had the vision to bring in NBC to work to be a total solution provider and if it pulls off this, it will create a new and interesting revenue stream as the basic products it seems to have built out its' core bread and butter business slowly withers away.      
danielcawrey
danielcawrey
10/26/2015 | 9:30:25 PM
Comcast Wireless
I believe Comcast has had plans to build out a wireless network for some time. And I agree with the fact that the company is going to need more than just wifi in order to make that concept a success. Going down the MVNO route is going to be the only way for Comcast to succeed in delivering wireless services. 
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