US cable operator Comcast recently announced plans to expand its deployment of a new home gateway to support a private home WiFi network as well as act as a public WiFi hotspot. This hybrid private-public strategy is nothing new. In 2007, Time Warner Cable announced a similar initiative in partnership with FON which never took off.
In Europe, FON has been more successful. But who really benefits from hybrid private-public WiFi hotspots, and how?
For the consumer, evolving WiFi technology and increased availability is poised to change the mobile experience. For fixed operators such as Comcast, the benefits and objectives of a hybrid private-public WiFi offering are starkly different compared to those of mobile operators.
Fewer free options for consumers
Comcast has the highest number of fixed broadband customers in the US. In theory, mass conversion of Comcast’s private home routers provides a huge boost to the number of public WiFi hotspots in its footprint. Meanwhile, public WiFi is set to provide a more private experience through new WiFi technologies and policies.
With Passpoint certification and roaming agreements, WiFi subscribers will soon be able to use a single sign-on at multiple hotspot locations via their own service provider. In April 2013, Comcast, Cablevision, Time Warner Cable, Cox, and Brighthouse formed an alliance to expand public WiFi coverage for their customers, establishing a new “nomadic” mobile strategy. This US Cable WiFi Alliance already offers a single sign-on for subscribers in their combined US footprints. As a result, customers can connect more easily in many more places than before.
In addition to mobility and coverage, hybrid private-public WiFi hotspots provide customers with extra capacity (an additional 25Mbps) and redundancy in densely populated locations. Both Comcast and FON claim that the separation of public and private WiFi traffic ensures no degradation of the home WiFi experience.
But with increasing efforts among service providers to monetise WiFi, customers are facing the prospect of fewer free and customer-agnostic public WiFi hotspots. Instead, WiFi access will increasingly become a matter of whether you are a customer of the service provider that funds the hotspot, and their roaming or sharing arrangements with venues.
Mindful of privacy concerns, consumers are also likely to question whether they will really benefit from such hybrid routers and whether the quality of their connection will suffer. Comcast’s subscribers will not receive compensation for usage of their home routers by the public, or benefit from the density of European deployments. In suburban US, houses are often set further apart, and non-locals looking for free, unsecured WiFi hotspot access in residential areas are otherwise known as “strangers.” Comcast and others looking to deploy residential WiFi should leverage their strengths in hyper-local marketing and promote the concept of “WiFi in the community”, something mobile operators are much less adept at.
Different benefits for fixed and mobile providers
Time Warner Cable claims that its public WiFi offering (not the hybrid version mentioned earlier) is helping to attract and retain customers for its core products, who are also more likely to upgrade or add more services. BT, FON’s earliest WiFi partner, claimed similar benefits. As of 1Q13, BT has reported almost 300 per cent growth in WiFi customers year-on-year. But even after almost six years of deployment, BT does not break out the results of the in-home (in other words the hybrid) and “out-of-home” WiFi segments. It’s still unclear as to what extent the addition of the private home routers as public hotspots has added to the success of its general WiFi hotspot strategy.
For a mobile or integrated operator, home WiFi networks, whether hybrid or not, bring significant cost-saving benefits; the majority of mobile traffic is offloaded via private WiFi networks, leading to lower infrastructure spend. But for cable operators, the benefits are less clear. A Comcast (or other fixed-only provider) hybrid private-public home network is unlikely to match a public hotspot in incremental revenues. Yet Comcast has to spend a significant amount of money upgrading the router.
Comcast may gain in marketing and sales bragging rights though. Currently Comcast’s WiFi footprint consists of the 100,000 existing hybrid private-public WiFi hotspots it claims to have, along with a dominant share of the 150,000 Cable WiFi alliance hotspots. We at Ovum estimate approximately 150,000 combined. In comparison, AT&T, which has the oldest and largest WiFi network among mobile operators, had just 32,000 hotspots at the end of 2012, after years of deployment. While AT&T’s network may get more traffic (and thus offer more customer touchpoints and overall value), Comcast will almost certainly leverage its much bigger numbers for marketing purposes, and this may even provide an advantage in negotiating contracts with business customers and roaming partners.
Still, Comcast must not be too optimistic about seeing any positive direct impact from a hybrid private-public WiFi strategy. For all operators, but especially for cable and fixed-only operators, WiFi is just one of a host of things operators can and should be doing to better serve their customers and protect revenues that are under threat from a growing number of competitors.