Cablevision launches 'OMGFAST' wireless broadband service
Cablevision (NYSE: CVC) recently began marketing a fixed wireless broadband Internet and telephone service in Florida called OMGFAST, charging subscribers $29.95 monthly for a 50 Mbps Internet connection that competes with Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC) and other cable operators.
In 2004, Cablevision, through a subsidiary called DTV Norwich, bid $84.6 million to acquire broadband licenses in 45 markets in an FCC auction for Multichannel Video Data Distribution Service (MVDDS) spectrum which can be used to deliver wireless video, voice and Internet services to subscribers with fixed wireless receivers. In addition to offering Cablevision the capability to deliver a triple play of pay TV, Internet and phone service, MVDDS could allow Cablevision to pitch wireless phone carriers backhaul services to help meet demand for mobile data sparked by the popularity of devices such as Apple's (Nasdaq: AAPL) iPhone and iPad and smartphones running Google's (Nasdaq: GOOG) Android platform.
Cablevision has asked the FCC to allow MVDDS providers to increase the power levels of MVDDS transmitters so they could be used to deliver wireless backhaul services.
Executives at Cablevision have said little about the company's ambitions for the MVDDS licenses since DTV Norwich emerged as the top bidder in the 2004 auction in which it competed for MVDDS licenses with several companies, including South.com, a company backed by EchoStar (Nasdaq: SATS) and Dish Network (Nasdaq: DISH) founder Charlie Ergen. Documents obtained by FierceCable show that Cablevision is helping OMGFAST, which was formerly known as Clearband, recruit employees and handle legal filings. Key players backing OMGFAST include Cablevision founder and cable pioneer Chuck Dolan, who controls a 90 percent stake in the company, and George S. Blumenthal, the founder of British cable MSO NTL, who holds a 10 percent stake. OMGFAST announced in May that it had launched its broadband wireless product in the Margate area in Florida, and that it planned a "significant expansion" of its service area in Broward and Palm Beach counties throughout 2012 and 2013.
Earlier this month, the company changed its name to OMGFAST, incorporating the slang abbreviation for "oh my god" that is often used in text messages. On July 3, Cablevision subsidiary Rainbow MVDDS Company filed a trademark application for the brand "OMGFAST," which the company said would be used to provide "Internet access via wireless broadband," according to the U.S. Patent & Trademark Office. RMVDDS listed the address of Cablevision's corporate headquarters in Bethpage, N.Y., in the filing.
Cablevision's human resources department is also helping OMGFAST recruit employees. The company lists several OMGFAST jobs on its Cablevision Jobs website, including principal engineer, IT project manager, and sales and accounting positions.
Transmission and spectrum regulation
MVDDS services rely on microwave transmitters placed on communications towers and rooftops to deliver broadband data to subscribers who have installed antennas that look similar to the high-power satellite receivers used by DirecTV (Nasdaq: DTV) and Dish Network. OMGFAST posted a YouTube video in April that demonstrates how its product works, hiring former Miami Dolphins cheerleader Andrea Campo to pitch the product to residential and business customers. "Because we know what the future holds, we have placed ourselves in the right place and at the right time, offering a unique product alternative in a technology driven society," Campo says in the video.
While some MVDDS license holders are testing ways to deliver cable TV programming to subscribers, Cablevision's OMGFAST subsidiary is only offering customers in Florida access to high-speed Internet and voice services. The company says users can get download speeds of up to 50 Mbps through its $29.95 service. For an additional $14.95 monthly, subscribers can receive a telephone service offering unlimited local and national calls.
Cablevision disclosed in an FCC filing from DTV Norwich in 2010 that it has tested ways to deliver wireless video, voice and data service using MVDDS spectrum, but that it has faced challenges obtaining equipment needed to offer those services.
Cablevision acquired MVDDS licenses in 45 markets in the 2004 auction through its DTV Norwich subsidiary, including New York, Los Angeles, Chicago, Philadelphia, San Francisco, Miami, Cleveland, Nashville, and Tampa-St. Petersburg. But FCC cross-ownership rules may force Cablevision to sell the New York license, or limit its broadband wireless service to parts of the market in which it doesn't market its Optimum digital cable, phone and Internet products to subscribers.
In one of seven waiver requests DTV Norwich has filed with the FCC, the company told the commission in September 2010 that it needed more time to comply with the cross-ownership rules in part because it has had difficulty obtaining equipment needed to develop an MVDDS service. DTV Norwich "argues that although it has continued to make progress towards developing the 12 GHz equipment and service configurations needed to successfully deploy wireless broadband, video, voice and data services to businesses and consumers, additional time is still needed," FCC broadband division chief Blaise Scinto wrote in an order that gives Cablevision until Sept. 23, 2014, to come into compliance with the cross-ownership rules.
Wireless backhaul opportunity
Providing wireless backhaul services to wireless carriers has become one of the biggest areas of revenue growth for Comcast, Cablevision, Charter Communications (Nasdaq: CHTR), Cablevision and other cable MSOs. The FCC is conducting a rulemaking proceeding in which it is considering allowing microwave services such as Cablevision's OMGFAST to use their radio transmitters to deliver wireless backhaul from cell towers. But since MVDSS uses a frequency that is close to those used by DirecTV and Dish Network, there is debate about whether MVDDS services would generate interference with satellite TV programming if they were used to handle wireless backhaul.
Cablevision argues that MVDDS wouldn't interfere with DirecTV and Dish Network signals. "Not only will the highly directional antennas that would be utilized to provide point-to-point service limit the potential scope of interference, but the terrain, buildings, foliage and other factors that limit reception also will help to 'shield' the receive antennas of other users," Wayne Johnsen, an attorney that represents DTV Norwich at Washington, D.C. law firm Wiley Rein, wrote in an FCC filing in October 2010.
It's not clear how soon Cablevision will expand the OMGFAST high-speed Internet and telephone service to markets outside Florida. "OMGFAST! is a developmental project offering high-speed wireless broadband service in Florida's Broward and Palm Beach counties. We currently have no expansion plans and any future plans would be informed by the business results," Cablevision VP of corporate communications Kelly McAndrew said in a statement provided to FierceCable.
Darren Nichols, who runs OMGFAST as SVP of operations, worked previously at WiMAX provider Clearwire (Nasdaq: CLWR) and Arizona-based Transcend Broadband before joining Clearband in October 2009, according to his LinkedIn profile. Nichols didn't respond to interview requests.
The OMGFAST rollout in Florida remains the only commercial deployment of a product that relies on MVDDS spectrum, but other companies are conducting tests. Last year, Bruce Fox, who bid more than $2.3 million to acquire 24 MVDDS license in the 2004 auction, launched an MVDDS trial in Baltimore. Fox formed a consortium of MVDDS license holders called Go Long Wireless, which he says has rights to MVDDS licenses in 49 markets.
Fox told FierceCable that while MVDDS could be used to deliver pay TV programming, his company is more focused on high-speed Internet and phone service. "The reality is there's no money in the video portion of being in an operation because of programming rights. We believe the real business model is high-speed Internet and VoIP," Fox said.
Veteran cable industry analyst and Leichtman Research Group principal Bruce Leichtman said the key to Cablevision's OMGFAST product will be how it is priced and the quality of its service. "The bottom line is consumers don't care about technology. Consumers care about whether it works or not," Leichtman said.
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