Has the time come for cable operators to start making some real money off WiFi? You bet it has.
With the US cable industry having set up nearly 12 million WiFi access points throughout the nation, there are now plenty of hotspots in place for operators to take financial advantage of their still-growing wireless assets. Indeed, Comcast Corp. (Nasdaq: CMCSA, CMCSK) alone has now deployed more than 10 million WiFi hotspots, while Cablevision Systems Corp. (NYSE: CVC) has deployed more than 1.1 million hotspots just in the greater New York metro area.
Yet, with the notable exception of Cablevision's fledgling WiFi-first talk, text and data service, Freewheel, no major US MSO has really attempted to monetize WiFi yet. Instead, cable operators largely offer WiFi as an extension of their wireline broadband services for either little or no extra cost to customers. And, even though WiFi's popularity is soaring, operators largely do not promote WiFi as an alternative or replacement for the cellular services of their telco rivals. (See Cablevision's New WiFi Try – Freewheeling Enough?)
Of course, there are good technical reasons why most cable operators haven't gone to town with WiFi just yet. Unlike cellular service, cable WiFi is generally not considered quite ready for prime time. But, thanks to the standards-making efforts of groups like the Institute of Electrical and Electronics Engineers Inc. (IEEE) , Wireless Broadband Alliance and Wi-Fi Alliance , cable WiFi is getting closer to carrier-grade WiFi every day. (See Time Warner Cable Whips Up More WiFi.)
Plus, consumer interest in a WiFi-first service is strong and growing. In a study conducted for Amdocs Ltd. (NYSE: DOX) earlier this year, Linx-IE Market Research Corp. found that 66% of consumers surveyed across the globe, and a whopping 77% of US and Canadian consumers, would consider replacing their current mobile/cellular plan with a WiFi-first offering if that offering were up to snuff.
"Only 10% of North Americans said never," noted Uri Gurevitz, director of market insight and strategy for Amdocs. The study surveyed 4,000 "digital consumers" in 11 nations around the world, including the US, Canada, UK, France, Germany, Brazil, Russia and Singapore. (See Amdocs: Pay-TV Can Play With OTT.)
In particular, US and Canadian respondents said they'd consider making the switch if the WiFi service offered the same access and coverage as their existing mobile Internet plan. Many respondents also said they'd consider a change if their main usage were Internet-related, not voice-related. Pricing lagged behind these and other key network factors.
"Definitely pricing is important," Gurevitz said. "But network quality is more important. Price becomes a very distant third, fourth or fifth."
It seems pretty clear, then, that the potential for monetizing WiFi is there. More than anything else, it may now just be a matter of crafting the right business plan.
Over the next couple of months, Light Reading will be delving more into these and related issues through a series of blog posts, webinars and events. First up, the two upcoming blog posts, sponsored by Amdocs, will focus on strategies for upgrading to carrier-grade WiFi and making money off the service. Then, our September 16 webinar, "WiFi First or Second?" --- sponsored by Aptilo Networks AB , Arris Group Inc. (Nasdaq: ARRS) and Cisco Systems Inc. (Nasdaq: CSCO), and produced in partnership with the National Cable Television Cooperative Inc. (NCTC) -- will look at how smaller cable operators can make WiFi investments pay off.
Finally, our October 14 breakfast roundtable event at SCTE Cable-Tec Expo in New Orleans, "Winning with WiFi" -- sponsored by Alcatel-Lucent (NYSE: ALU), Amdocs, NetScout Systems Inc. (Nasdaq: NTCT) and Viavi Solutions Inc. (a spinoff from the old JDSU), and produced in partnership with the Society of Cable Telecommunications Engineers (SCTE) -- will tackle the challenges of optimizing and monetizing cable WiFi networks.
So watch for all these upcoming blog posts and events and join the evolving discussion. Because the time for cable to start making real money off of WiFi has come.
— Alan Breznick, Cable/Video Practice Leader, Light Reading