High on Wifi
Behind Cable's Strategy to Build Out Hotpots
By: Jeff Baumgartner
Multichannel News
May 13 2013 - 12:00am
http://www.multichannel.com/distribution/high-wifi/143257
Hotspots are heating up.
The Wi-Fi networks of U.S. cable operators are multiplying by the day,
driven in large part by the five MSOs that formed a “CableWiFi” roaming
consortium last year. Those operators — Bright House Communications,
Cablevision Systems, Cox Communications, Comcast and Time Warner Cable —
have combined to deploy more than 161,400 public access points,
according to data compiled by Multichannel News. Much of those
deployments are concentrated in parks, cafes, downtown areas and other
high-traffic, public “hot zones.”
“As we’ve continued to build, you can see traffic patterns and then you
know where you need to fill in further,” Gemma Toner, Cablevision’s
senior vice president of broadband product management, said.
Cablevision, which touts the largest Wi-Fi network of the lot, has about
80,000 hotspots deployed in its New York, New Jersey and Connecticut
tri-state region. Comcast, with 55,000 — more than double the 25,000
access points it had deployed by the end of 2012 — isn’t far behind.
Most of Time Warner Cable’s 10,000 access points are located in Los
Angeles, but in 2013 “our big push is to get the New York City market up
and running and to continue our build out in Charlotte and Kansas City
and Los Angeles, and probably a couple of other new markets,” TWC senior
vice president of corporate development Mike Roudi said.
For now, the Wi-Fi offensive is a retention tool, a way to keep
customers loyal and out of the hands of competitors. But much of cable’s
effort has an eye toward the future revenues Wi-Fi can bring in. By
peppering high-capacity Wi-Fi access points into their service areas,
cable operators hope to broaden their reach even further with new
technology and tap into lucrative money-making opportunities —
particularly as cellular carriers look for ways to keep the amount of
data fl owing over their 4G wireless networks in check.
ADDING VALUE TO HSI
“It [Wi-Fi] is 100% to drive or to add value to our high-speed data
product offering,” Roudi said. “I want my 10 million-plus high-speed
customers to stay with us on our network as long as possible.”
For instance, TWC is deploying Wi-Fi networks in Kansas City and Austin,
Texas, markets where it is facing or will soon face off with Google Fiber.
But future revenues could fall outside these initial focus areas.
Several MSOs also sell access to nonsubscribers, for example. “It’s not
a driver, but it’s something we do. That doesn’t drive anything around
how we deploy [Wi-Fi],” Roudi said.
Cablevision, Toner said, just recently started to sell day passes to
nonsubscribers on a “very limited basis” in some parks and at Long
Island’s MacArthur Airport.
But cable’s Wi-Fi networks also set the stage to sell data-offloading
services to mobile carriers that are looking to redirect bits off their
shiny, new 4G mobile networks. Cable’s Wi-Fi and plant infrastructure
position MSOs to sell access to their own facilities to mobile carriers
that are eager to deploy small cells that can boost and concentrate
their mobile data coverage.
4G TRAFFIC COP
That sort of scenario would make cable operators start to look like
tower companies that lease physical assets to mobile carriers. That
strategy is “brand new,” according to David Callisch, vice president of
marketing at Ruckus Wireless, a company that sells Wi-Fi gear to MSOs
such as TWC and Bright House.
A paper issued last year by Richard Thanki, a doctoral candidate at the
U.K.’s University of Southampton, highlighted the opportunity. He
suggested that without Wi-Fi, cellular operators would need to build as
many as 450,000 new radio base stations, at a staggering cost of $93
billion, to handle the anticipated influx of mobile data traffic.
For now, though, customer retention remains the biggest driver, and for
good reason. Cable operators are still adding broadband customers at a
healthy clip, but the pace is slowing as the domestic broadband market
reaches saturation.
According to Leichtman Research Group (LRG), the top 17 U.S. telcos and
MSOs, representing 93% of the market, acquired more than 2.7 million net
additional high-speed Internet subscribers in 2012, extending their
total to 81.4 million subs. While the number is still rising, those 2.7
million net adds represented 90% of the total net adds in 2011.
“We’re talking about a pretty mature [broadband] market,” Bruce
Leichtman, LRG’s president and principal analyst, said. “We’re not
talking about a service for the 82nd millionth subscriber. At this
point, so many things come down to retention.”
FUTURE TREND: HOME AS A HOTSPOT
Although U.S. cable’s roaming club has deployed more than 161,400 public
hotspots, that combined reach falls well short of achieving nationwide,
blanket coverage. Based on MCN’s analysis of the Wi-Fi deployments known
to be on deck or already well underway, cable systems in those markets
serve roughly 11.5 million cable subscribers combined, or about 20.3% of
the 56.4 million total video subscribers served by U.S. cable operators
at the end of 2012, according to SNL Kagan. This most recent consortium
follows a failed attempt at mobile broadband in cable’s Sprint-Clearwire
partnership.
Cable’s current partnerships with Verizon Wireless will give MSOs wide
mobile coverage, but there is already another way for cable operators to
fill in some of the gaps by converting DOCSIS-powered, Wi-Ficapable
gateways into quasi-public hotspots. Chip sets in today’s advanced cable
gateways already possess the ability to split bandwidth between the home
subscriber and authenticated, roaming users. With upgrades, those
devices are capable of broadcasting multiple Service Set Identifiers
(SSIDs).
“We call it home-as-a-hotspot,” TWC’s Roudi said of this budding
strategy. The MSO has deployed a “limited amount” of such gateways, but
such products “are very much in our immediate future,” he added.
Turning those gateways into public hotspots doesn’t appear to be a high
priority among major U.S. MSOs, though. Bright House “is closely
following the progress of other MSOs launching such initiatives,” a
spokeswoman for the operator said. “While we find the concept
interesting, we have no plans at this time to launch a similar product.”
Added TWC’s Roudi: “We believe that we will get much more value out of
deploying our Time Warner Cable Wi-Fi network outside the home, which is
where we’re spending all of our energies now.”
Any home-as-a-hotspot strategy comes with intricate scaling and
management issues for devices and accounts.
One MSO that has made this strategy a priority is Ziggo, the largest MSO
in the Netherlands. In April, Ziggo launched an ambitious national Wi-Fi
plan that involves turning almost 1 million wireless home gateways into
public “Wifi Spots.” The MSO expects to complete that part of the
deployment by the end of August.
After a one-time registration, Ziggo’s software Wi-Fi clients in mobile
devices automatically connect to available hotspots, the MSO said. Each
home-based Wifi Spot can accommodate up to 20 users simultaneously. The
eventual size and scope of Ziggo’s plan will also be determined by how
many customers opt out of the program. Citing initial tests in
Groningen, Ziggo said less than 1% of customers opted out.
To alleviate customer angst about the idea of sharing access, Ziggo said
it has adapted the gateways to ensure total separation between the
public Wifi Spot and the home network “so that optimum security and
privacy are guaranteed.”
And it’s not just about extending access. The MSO is also developing
mobile TV and voice apps for smartphones and tablets that are optimized
for Ziggo’s expanding Wi-Fi network, MSO spokesman Martjin Jonker said.
WI-FI’S 1 GIG FUTURE
While 1 Gigabit per second appears to be wireline broadband’s next big
speed goal, 1 Gig also happens to be the target of 802.11ac, Wi-Fi’s
next iteration. But don’t expect that technology, sometimes referred to
by vendors as “5G,” to show up on cable’s public Wi-Fi networks in a big
way for a couple of years.
According to Callisch, there are two issues with it: it’s expensive and
it won’t necessarily offer those promised speeds right away. He sees
802.11ac emerging with increasing capabilities. “We advise them [cable
operators] to deploy it in pockets,” he said of 802.11ac. “MSOs are not
as interested in 802.11ac as they are in grabbing footprint and putting
access points where they know people want them and need them.”
Most vendors are expected to support Wave 1 802.11ac, even if the value
is to supply more aggregate capacity rather than supersonic speed
bursts. When Wave 2 hits in 2014 and 2015, “that’s when we’ll see big
increases in speeds. But it will require new equipment. Our advice is to
[deploy 802.11ac] very sparingly and don’t jump into it,” Callisch said.
Freeing up 5 GHz of spectrum for 802.11ac is already high on the minds
of cable operators, though, which worry that the crowded 2.4 GHz band
will soon face exhaustion. Indeed, the Federal Communications Commission
is now considering new rules to free up 195 MHz of additional spectrum
in the 5 GHz band.
“The 5 GHz band represents a crucial resource as the FCC works to
alleviate the dramatic shortage in spectrum available for unlicensed
services,” Thomas Nagel, the senior vice president of business
development and strategy for communications and data at Comcast, noted
recently in prepared testimony for a “State of Wireless Communications”
Senate hearing.
TAKEAWAY
MSO-run Wi-Fi networks are starting to achieve scale as operators seek
ways to mine more value from their broadband networks and tee up
potentially lucrative data-offloading deals with mobile carriers.
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Associate Professor Fax (713) 743-3927
Political Science Mail: antunes at uh dot edu
University of Houston
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