10 Sep 2010
Cable operators have encroached on nearly every part of traditional telecom turf over the past few years, with one notable exception: wireless. In an effort to reduce churn and get in on the rapidly growing mobility market, US cable companies are making free Wi-Fi hotspots in select cities part of their customer retention strategy - -generating services based on or tied to Wi-Fi.
"If you look at this in isolation, you'd say it doesn't make any sense. But if you look at it in [light of] the value proposition, it makes a lot of sense," said Mike Jude, program manager for Stratecast, a division of Frost & Sullivan. "This integrated service environment is starting to set the standard for [the perceived value of services]."
With thousands of miles of cable plant already in the ground and no appetite for spending billions to build mobile networks from scratch, cable operators can use Wi-Fi hotspots to cost-effectively extend wireless services to subscribers on top of their existing infrastructure, Jude said. It's a natural choice for operators since many mobile devices, including most smartphones, now support Wi-Fi, he added.
Although Wi-Fi has a much shorter range than cellular signals -- feet versus miles -- the capital expense of a few thousand wireless access points (APs) in select cities is dramatically below the cost of building cell sites and base stations nationwide.
Free Wi-Fi with widespread coverage is also more palatable to consumers who are weary of shelling out $15 to $30 every month for 3G data services, which notoriously slow to a crawl in the same cities that cable operators are peppering with hotspots.
"Wi-Fi really isn't that expensive an adjunct to a cable operator's business. In fact, it's a lot less expensive than offering cellular data," Jude said. "We're almost certain that it's a value-add [service] for customer retention and maybe some customer attraction."
Although LTE offers a theoretical 100-150 Mbps downlink in pristine laboratory conditions, the latest Wi-Fi standard, 802.11n, blows it away with a 600 Mbps theoretical max. Those throughputs will be tough to achieve outside labs, but 802.11n APs still typically offer 300-450 Mbps, whereas actual LTE speeds are expected to be between 5 and 12 Mbps.