Less than a year and a half after Cablevision launched its WiFi phone service known as Freewheel, new owner Altice has decided to shut it down. According to the Wall Street Journal, Altice plans to discontinue Freewheel in a round of cuts aimed at improving the cable company's balance sheet. The fact that Cablevision has never shared subscriber numbers for the service suggests that consumer demand wasn't strong enough to justify Freewheel's continuing existence.
Cable operators in the US have been notoriously bad at cracking the mobile market, as evidenced by failures like the industry's Pivot joint venture with Sprint Corp. (NYSE: S) that ended back in 2008, and a partnership with Clearwire that was terminated in 2011. (See Cable's 3 Wireless Whiffs.)
However, the Freewheel service was the first major US cable effort to rely on WiFi for mobile connectivity, which is worth noting in light of the industry's high hopes for WiFi in the future. Comcast Corp. (Nasdaq: CMCSA, CMCSK) Vice President Tom Nagel memorably called WiFi "our mobile network of choice" back in 2014.
Luckily for Comcast and others, there were a number of issues that made Freewheel unsuccessful that future WiFi phone services should be able to address. For example, Cablevision (now Altice ) limited consumer handset options with Freewheel to a single phone. And the company failed to introduce a disruptive pricing model, charging $29.95 per month for the service for non-Cablevision subscribers and $9.95 per month for existing customers. That sounds promising compared to other phone plans, but the only premium network value Freewheel provided was access to Cablevision's WiFi footprint; something that Cablevision Optimum Online subscribers already have access to for free. (See Cablevision's New WiFi Try – Freewheeling Enough?)
Perhaps most importantly, the Freewheel service was designed to be entirely dependent on WiFi, making it difficult for consumers to rely on in a world where WiFi service isn't always available. In contrast, Comcast and Charter Communications Inc. both have access to mobile spectrum through an MVNO deal made with Verizon Communications Inc. (NYSE: VZ) back in 2012. They have the option to use that spectrum -- and/or other spectrum gained through auction or acquisition -- to create a fallback network for customers who navigate to regions without WiFi coverage.
Despite Freewheel's failure, industry analysts are highly optimistic about other domestic cable companies -- notably Comcast and Charter -- taking significant share in the mobile market going forward. Craig Moffett of MoffettNathanson Research believes that cable operators can leverage their existing last-mile infrastructure to support new wireless services and disrupt incumbent carrier pricing models. (See Analysts More Than Bullish on Comcast MVNO.)
And New Street Research analysts, according to a report by FierceWireless, are predicting that cable companies could steal 35 million customers away from major mobile providers in the next five years.
The Freewheel experiment may be over, but cable's quest for mobile market share is still going strong. If industry observers are correct, a new cable-powered mobile service will emerge before the end of 2016.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading