Much of the focus of Comcast’s(s cmsca) proposed $45.2 billion deal to acquire Time Warner Cable(s twc) is on the huge cable TV and broadband empire it would create. But as my colleague Stacey Higginbotham pointed out the two companies have another network asset to play with: Wi-Fi. Let’s dive a little deeper into what a potential Comcast-TWC deal might mean for the wireless industry.
The two cable companies have already built extensive outdoor and indoor hotspots in big cities around the country, and they’ve both teamed up with fellow cablecos Cox Communications, Cablevision Systems(s cvc) and Bright House Networks to pool their wireless assets and create the CableWiFi grid.
CableWiFi has 200,000 hotspots today, making it the largest Wi-Fi network in the country, the cable providers claim. Most of those networks are concentrated on the Eastern Seaboard, west coast and big cities in the Midwest, but it’s growing rapidly. Any of the five participating companies’ residential and business broadband customers can connect to that grid free of charge.
Comcast and Time Warner are the two biggest contributors to that network, which would instantly give them one of the largest hotspot networks in the country. But Comcast has gone one step further. It has begun using its customers’ residential broadband gateways as hotspots as well. Its new home router essentially hosts two separate Wi-Fi networks, one that any Comcast customer can access and another private network for the home.
A merger would extend that home hotspot network to Time Warner’s territory as well. The end result would be one hell of a wireless network, covering commercial areas with high-powered access points and residential areas with a dense network of home routers.
What could Comcast-TWC do with such a Wi-Fi network? First off, they could sell access to it. While it’s becoming increasingly difficult to sell Wi-Fi to end consumers, Wi-Fi is becoming increasingly valuable as a commodity that can be traded to other carriers and ISPs. Managed hotspot providers like Boingo(s wifi) and crowdsourced Wi-Fu curators like Devicescape are increasingly selling their services to carriers.
Mobile data use is skyrocketing. Cisco Systems’(s csco) mobile networking report shows that the average U.S. consumer ate up 1.4 GBs of mobile data each month in 2013. And while mobile carriers are rushing to build more capacity, they’re also looking for cheap pipes to dump their mobile traffic onto. Wi-Fi fits the bill.
Not just carriers would be interested in buying access off such a network. Intel(s inct) is already using Devicescape to give its Ultrabook customers access to free Wi-Fi. And Amazon(s amzn) seems to be shopping around for alternate wireless network to feed its Kindle Whispernet.
Second, Comcast could use its souped-up hotspot network as a launching point for becoming a mobile provider in its own right. It can’t build a mobile data network on Wi-Fi alone. It simply wouldn’t be able to squeeze the coverage out of it on a cellular network. But there’s a growing trend toward “Wi-Fi first” mobile carriers in the U.S., popularized by Iliad’s Free Mobile in France, and emerging in the U.S. with mobile virtual network operators like Republic Wireless.
Comcast-TWC could use Wi-Fi as the data backbone for a mobile service and then buy 3G or 4G capacity from the mobile carriers to fill in the gaps. What would such a service look like? Like Dish, Comcast could offer a free or discounted iPad to customers so they can watch their video programming remotely, but instead of just providing the hardware it could also give them connectivity. Customers would be able to tap the Wi-Fi grid as much as they liked, and then Comcast could supplement that access with a modest cellular data plan.
Or if Comcast decided to get really aggressive, it could start selling a true mobile service with all of the voice and messaging whistles. It would have to lean much more heavily on mobile carrier partners to pull that off, given the huge yawning gaps in between, but it could be done.
Perhaps not coincidentally, a new industry organization called WiFiForward emerged today with the goal of lobbying the government for more unlicensed airwaves on which to build more Wi-Fi networks. The membership includes the usual suspects Google(s goog), the Consumer Electronics Association and Microsoft(s msft), along with both Comcast and Time Warner.
The cable operators have toyed with the idea of becoming mobile carriers before — going so far as to buy their own spectrum nearly a decade ago — but all of their efforts fell flat. With Wi-Fi, though Comcast and Time Warner could get a second chance.