Cable operators are poised to shake up the wireless high-speed data business by using Wi-Fi hotspots to sell services that rely on Hotspot 2.0 technology, which could simplify Wi-Fi roaming, Jefferies analyst Thomas Seitz said in a research note Tuesday.
"We believe the inexorable current below the surface is that cable will enter the wireless market in a disruptive, Wi-Fi/MVNO [Mobile Virtual Network Operator] manner in the foreseeable future," Seitz said.
The widespread rollout of Wi-Fi hotspots from MSOs such as Comcast (Nasdaq: CMCSA) and Cablevision (NYSE: CVC) could help operators sell services to mobile device users who are charged data fees from wireless phone providers, Seitz said. He pointed to the 150,000 hotspots that have been built by the CableWiFi consortium, which includes Comcast, Time Warner Cable (NYSE: TWC), Cox Communications, Bright House Networks and Cablevision. Seitz also noted the significance of Comcast's recent announcement that it will use wireless home gateways in subscriber homes to offer neighborhood hotspots run from a separate antenna, which could potentially allow it to offer millions of hotspots.
"With consumers increasingly frustrated by the cost of wireless service, we expect widespread testing of concepts by cable to be public as early as 2014," Seitz said. The Jefferies analyst didn't detail the pricing models he expects cable operators to pursue, but suggested cable's potential to exploit its wireless data capabilities make the stocks of public MSOs a good buy. "We believe cable's material wireless opportunity is under-appreciated by the market," Seitz wrote.
- see the analyst note
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