Cablevision is shutting down its Freewheel in a move that underscores the difficulties cable companies face as they try to elbow their way into the wireless market.
The New York state-based cable operator launched Freewheel last year, hoping to lure customers with a Wi-Fi based service focused on data rather than aiming to replace cellular offerings. The service cost $9.95 a month for Cablevision's Optimum Online customers and $29.95 a month for non-customers.
At launch the offering worked only with Motorola's Moto G, which sells at a heavily discounted $100.
But Altice, a Dutch telecom conglomerate that has begun to close on its acquisition of Cablevision, recently gave its soon-to-be subsidiary the green light to close down Freewheel, according to a report today in The Wall Street Journal.
Unlike Wi-Fi-first MVNOs such as Republic Wireless or Scratch Wireless, Freewheel can't access cellular networks where Wi-Fi service is unavailable. But Cablevision clearly thought it could attract users who may not need constant connectivity on the go.
"Cellular was built for voice and Wi-Fi was built for data, which is why Wi-Fi is the preferred choice for data usage today," Cablevision COO Kristin Dolan said at the time in a statement. "Freewheel integrates a high quality device backed by the strength of our professionally maintained carrier-grade Wi-Fi network. As the thirst for data continues to grow, Freewheel provides consumers with a better, faster data experience, all at a fraction of the cost of cellular."
The decision comes just as some other cable operators appear to be preparing to compete for U.S. mobile customers. Comcast (NASDAQ: CMCSA), the world's largest cable TV company by revenue, executed on its MVNO deal with Verizon (NYSE: VZ) last fall and is rumored to launch a service leveraging its Wi-Fi footprint sometime this year. Comcast is also preparing to participate in the FCC's incentive auction of 600 MHz spectrum, potentially paving the way for it to offer its own service and lessen its dependence on Verizon.
Charter CEO Tom Rutledge, meanwhile, said last month his company could offer a nationwide wireless service because its Time Warner Cable acquisition gives it access to the same Verizon MVNO agreement as Comcast. Charter is now the second-largest cable operator in the U.S. behind Comcast.
New Street Research analysts said this week that cable operators could take 20 percent of the wireless market in five years, causing incumbent cellular carriers to lose between $1.8 billion and $3.8 billion in EBITDA during that time. Comcast, Charter and others clearly can take some lessons about what Freewheel did wrong – and what it did right – as they pursue their wireless strategies.
- see this Wall Street Journal article
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