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WiFi an Optimum Weapon

Michael Harris
BroadBananas
Michael Harris
9/17/2008

12:10 PM -- Because Clearwire LLC (Nasdaq: CLWR) is waiting for its deal with Sprint Corp. (NYSE: S) to close before deploying WiMax mobile broadband, its major MSO partners, including Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC), are also in a holding pattern. (See CTIA: Clearwire Talks Android & More.)

But not Cablevision Systems Corp. (NYSE: CVC). Once again the maverick MSO is doing things its own way. Rather than waiting for WiMax, Cablevision has already widely deployed WiFi service in its Long Island footprint. Other parts of New York, New Jersey, and Connecticut won’t be far behind. Cablevision’s WiFi offering is free for its Optimum Online residential customers (See Cablevision Plays WiFi Card .)

It’s an absolutely brilliant strategy. While Verizon Communications Inc. (NYSE: VZ) is spending hand over fist to roll out FiOS to reinvigorate its declining landline business, it is wireless that is now driving the company’s growth. Undoubtedly, Verizon has been counting on bundling FiOS with its pricey EVDO mobile services to create a compelling broadband-anywhere service package.

Cablevision’s bold WiFi rollout -- which is reportedly costing the MSO $300 million -- hits Verizon where it really hurts: in wireless. Mobile broadband Internet access for a laptop through Verizon Wireless costs $60 per month for 5 GB of usage. The cost for Cablevision’s faster Optimum WiFi: zero. That is, if one is already an Optimum Online customer. And, with that carrot dangling in front of them, many users are likely to eschew Verizon’s FiOS to get free WiFi access from Cablevision. Not just for their laptops, but for their PDAs too. Walking around town with their BlackBerry Curves or iPhones and seeing repeated device messages proclaiming “Optimum WiFi available” will likely prove far too tempting to ignore.

— Michael Harris, Chief Analyst, Cable Digital News

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