Who will partner with Cablevision for WiFi/cellular service?

Not surprisingly, Cablevision revealed it is trialing phones that seamlessly move between WiFi and cellular networks.

Tom Rutledge, COO of the MSO, which is successfully using its own WiFi network in New York, New Jersey and Connecticut to stave off competition from Verizon, indicated during the company's fourth-quarter conference call that it is trialing services that involves traffic moving over the company's WiFi and cable network, while moving on to a cellular network when outside of any of Cablevision's services.

He said the test so far is "proving to be good and consistent with our view of what is possible and gives us some hope that we will be able to launch additional products using the WiFi network that will look like what some people think of as cellular telephone." Back in August, Rutledge hinted at such a service, saying he thought "that a wireless voice network riding on top of a wireless data network is inevitable." He wasn't clear, however, about whether a cellular component would be involved.

Interestingly, Rutledge said the company hasn't made any decisions about whether it will build its own mobile network or lease capacity from a provider, but "the latter outcome would be a less capital-intensive, higher-return business." I highly doubt the MSO will build its own mobile network given the fact that its approach to wireless has always been one that involves little capital expenditure. Its projected spend on the WiFi network was initially $300 million, but Cablevision recently revealed it is running 15 percent below that number. Meanwhile, Rutledge has also touted the opportunity to create a voice business with little capital expenditure.

So that leaves a cellular partner. The logical choices are T-Mobile and Sprint, which aren't competing on the landline side with Cablevision. A natural fit would be T-Mobile, whose Unlicensed Mobile Access (UMA) service allows customers to use voice over WiFi in the home and the cellular network elsewhere. Cablevision has done some partnering with Sprint in the past, while MetroPCS and Leap Wireless, which is heavily pushing flat-rate broadband, are potential candidates too.

I see an interesting interconnection agreement that could come to fruition. The importance of WiFi to mobile operators is growing. WiFi is being touted as a data offloading solution, a customer acquisition tool and even a cheaper way to roll out 4G. Cablevision's Optimum WiFi offering is in some coveted heavily trafficked areas, including downtown sites, parks and various outdoor locations. For instance, Cablevision's WiFi service is available in 96 percent of the Long Island Railroad and Metro North railroad platforms and parking lots throughout its service footprint. The MSO is vying to become a WiFi service provider for New York commuter trains and stations.

Cablevision might just have some good leverage for that mobile service piece.--Lynnette

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