Cablevision Launches First "Wi-Fi Only" Mobile Service

Cablevision Systems has launched Freewheel, its new Wi-Fi-only mobile service. It costs $30 a month for customers who are not buying Cablevision high speed access, but only $10 a month for consumers who do buy Optimum Online broadband services.

The service should provide a huge real-world market test of the attractiveness of a "Wi-Fi only" approach to mobile device access, a possibility that observers have speculated about--as an alternative to mobile service--for decades.

The market window for such an approach might be somewhat limited, some might argue, as coming fifth generation (5G) networks are expected to feature an ability for devices to choose any available access network.

Perhaps significantly, this is not the first time Cablevision has actually contemplated building a service that is mobile and untethered, but not “full mobile.”

Back in the 1990s, when the U.S. government was auctioning a new block of spectrum still called Personal Communications Service (PCS), the thinking was that the new spectrum might be used to create new types of services distinct from mobile service.

At that time, mobile service was expensive and used primarily by people in business. The thinking was that PCS would be a lower-cost type of mobile service.

Predating many of today’s fundamental concepts, the thinking was that Cablevision could create a big network of small cells, with antennas perhaps located at every amplifier location, which would create a grid of transmitting sites supporting in-home or pedestrian call hand-off between cells.

The thinking was that a person walking on a street would be able to transition a call between one small cell and the next, something that would not be possible at highway speeds, though.

So basically, the thinking went, the service would work in the space between a “home cordless phone” and a full “mobile service.”

Cablevision never proceeded with the plan, but as so often happens, some of the basic concepts were correct, but just too early for the commercial market.

Lower cost service, in home or pedestrian use, new spectrum, small cells, a new transmission network and new market entrants were hallmarks of the original Cablevision plan.

On the other hand, as also often happens, the potential market shifted. Whatever thoughts proponents might have had, the release of new PCS spectrum--initially thought to be the underpinning for new types of service--wound up bringing much more competition to the mobile services business, changing a niche market into a mass market.

With the release of PCS spectrum, Sprint and what become T-Mobile US emerged as leading mobile providers in a new mobile mass market.

That competition lead to far-lower service prices, which eliminated the gap between cordless phone and mobile phone service, and also made mobile a viable replacement for fixed voice service.

But the Cablevision Freewheel offer nevertheless is historic, as the first U.S. Wi-Fi only mobile service.

On the other hand, Freewheel faces a market likely to change. Already, most smartphone owners use a “mobile-first, Wi-Fi often” form of access.

In fact, in some cases, the volume of data consumed might already be “Wi-Fi first, mobile second.”

All other service provider offers already incorporate the ability to shift to Wi-Fi as the primary network connection.

A number of providers use a “Wi-Fi first” approach, with a switch to mobile access as needed.

Also, a growing number of service plans are offered at prices comparable to the Cablevision “not a subscriber” price of $30 a month. it is the $10 “current subscriber” price that is disruptive.

So the primary customer base is likely to turn out to be existing Cablevision high speed access customers.

HIstory suggests the offer will face high obstacles. Rarely, if ever, do “non-standard” consumer electronics or communications offers succeed broadly when they deviate from the general market expectations.

That has applied to any number of appliances that blend in-home phone and Internet access capabilities, for example. None have gotten traction. Instead, people rely on smartphones.

Cablevision suggests the service might appeal to several potential  customer segments, including people who do not travel outside the New York metro market that often, or

spend their typical days in WiFi-rich environments, including colleges, offices and homes.

Other potential customer segments include users who worry about overspending on data.

Also, Cablevision suggests, the service might appeal to customers who live in in areas that suffer from poor cellular reception  

The low price for Cablevision high speed access customers ($10 a month) might make it a useful service for children getting their first phones, the company suggests.

The issue is how long the market window exists for a Wi-Fi-only service, given the growing trend to “use any access” approaches.

Consumers Choose, Churn From Mobile Service Providers for Very Different Reasons

U.S. mobile service providers tend to lose customers for different reasons, a new study by Consumer Intelligence Research Partners has found, and the reasons are congruent with each firm’s positioning in the market.

AT&T and Verizon tend to lose customers because of the cost of service. That would make sense, as Verizon has a reputation as the “most expensive” carrier. AT&T does not hold quite that position in the market, but might generally be seen to be more expensive than Sprint and T-Mobile US.

Over half of consumers who switched from Verizon or AT&T said cost was the primary reason, compared to less than 40 percent for other deserting customers of Sprint or T-Mobile US.

On the other hand, customers leave Sprint and T-Mobile US because of perceived problems with network quality. That also might make sense, given the broader network coverage of the Verizon and AT&T networks.

Almost 40 percent of Sprint and T-Mobile departing customers say “network quality” is the reason they switched.

But customer churn also is less an issue than often is believed, the survey indicates. “Mobile phone customers are very loyal to their carrier,” CIRP argues.

Almost 80 percent of customers stay with their current mobile phone carrier when they buy a new phone, far more than stay with their operating system or brand of phone.

That 20 percent churn rate, spread over a two-year period, implies a churn rate less than one percent a month, at least when phones are replaced.

Loyalty varies somewhat among customers, with AT&T and Verizon maintaining the most loyal customers, and Sprint and T-Mobile have somewhat lower loyalty rates, CIRP notes. That is congruent with churn rates, which are lower at AT&T and Verizon than at Sprint and T-Mobile US.

As a generic, consumers arguably switch carriers for many reasons. Lower price, high cost, network quality, plan structure, device exclusivity or perhaps customer service quality might drive a change of service provider. But the survey shows the concrete reasons vary by carrier.

As you might guess, consumers also choose new carriers for different reasons.

AT&T and Verizon tend to appeal to consumers based on network quality, even though consumers think they cost more.

Consumers think that T-Mobile provides a lower-cost service, at the expense of network quality.

Sprint draws customers based on plan features, such as friends and family pricing or unlimited data.

Consumers do not appear to switch carriers based on the quality of customer service received from their old carrier or anticipated from their new carrier.

Verizon Sells 3.7 Million Lines, 7.1 Revenue Generating Units to Frontier Communications

Verizon Communications will sell its fixed network business in California, Florida and Texas to Frontier Communications Corporation for $10.54 billion (approximately $9.9 billion in cash, plus $600 million in assumed debt) for the business and related assets in these states.

At the end of fourth-quarter 2014, these operations served approximately 3.7 million voice connections; approximately 2.2 million high-speed data customers, including approximately 1.6 million FiOS Internet customers; and approximately 1.2 million FiOS Video customers.

The transaction includes Verizon’s FiOS Internet and Video customers, switched and special access lines, as well as its high-speed Internet service and long-distance voice accounts in these three states.

The consumer and small business wireline operations that Verizon is retaining provide service in nine states and the District of Columbia and had approximately 16.1 million wireline voice connections; seven million high-speed data customers, including approximately 5.1 million FiOS Internet customers; and 4.5 million FiOS Video customers.

The states in Verizon’s contiguous consumer wireline footprint are Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Washington, D.C.

At the same time, Verizon is returning a significant amount of capital to its shareholders through a $5 billion accelerated share-repurchase program.

In a separate transaction, Verizon also has agreed to lease the rights to over 11,300 of its company-owned wireless towers to American Tower Corporation, which will also purchase approximately 165 Verizon towers, for a total upfront payment of approximately $5 billion.

American Tower will have exclusive rights to lease and operate over 11,300 Verizon cell towers.

The average term of the lease rights is about 28 years. As the leases expire, American Tower will have fixed-price purchase options to acquire these towers based on their anticipated fair market values at the end of the lease terms.

Verizon will sublease capacity on the towers from American Tower for a minimum of 10 years for $1,900 per month per site, with annual rent increases of two percent. Verizon will have customary renewal options that could potentially extend the full term of the sublease to 50 years.

Earlier, I had estimated that “if Verizon acquires $10 billion worth of assets from Verizon Communications, and the value of a subscriber is about $3000, that implies the purchase of about 3.3 million subscribers. At $3200 per subscriber, the deal implies the purchase of about 3.13 million subscribers.”

The price actually wound up being about $2835, for a mix of consumer and small business accounts.

I Now Can Buy a Gigabit High Speed Access Service, But Won't Do So: Here's Why

Gigabit high speed access is a good thing, most might agree. But actual consumer behavior--inclding mine--might be quite different than some expect, when gigabit and 100-Mbps services are available, and people really have to make choices with financial implications.

For years, the fastest speed I could buy was about 20 Mbps, in Denver, even if other neighborhoods had been upgraded to 40 Mbps. The retail offer wasn't quite so good, as the preferable prices could only be gotten when high speed access was bundled with a voice line, a product I have no use for.

That now has changed. I now can actually buy either gigabit access or 100 Mbps from CenturyLink.

CenturyLink in 2014 said it would bring gigabit high speed access to 16 cities across the United States.  Some have questioned how widespread the service footprint would be, or the pace of upgrades.

Quietly, it seems, CenturyLink has been upgrading networks, including mine. 

In Denver, 16 neighborhoods seem to have been upgraded. In addition to gigabit services, customers also can buy 100 Mbps services.

In my own neighborhood, a gigabit will cost $110 a month, guaranteed for a year. The 100-Mbps service costs $70 a month, with the price guaranteed for a year. The 40-Mbps service, which I was told in 2013 was not available in my neighborhood, costs $30 a month, guaranteed for a year. All those prices are for stand-alone service, with no phone service.

Both the price-value and other terms and conditions are as good as I have been offered at any time over the past decade.

Now here’s the “bad news.” Having just experienced a speed upgrade from Comcast to 105 Mbps, (with consistent speed over time, of 75 Mbps)…..wait for it….I cannot easily detect, as a “dumb end user,” the benefit.

Let me say that again: after an upgrade from typical speeds of 15 Mbps to 75 Mbps, I cannot really tell the difference.

I wish I could say something noticeable happened. It has not.

That is going to be an issue, eventually. Line speed really doesn’t directly improve end user experience as much as one might envision, at least when there are not contending users sharing the line.

Oddly enough, despite waiting so long for 100 Mbps, to say nothing of a gigabit, and being able to buy both services, I am choosing not to by a gigabit. I can. I just don’t think it will provide any incremental value over 105 Mbps.

Shocking, I realize. It is surprising. But so far, I cannot tell the difference between the old 15 Mbps and the new 105 Mbps. And for that reason, I will not be upgrading to a gig. I could, but why?

More Trouble for Linear TV?

Total live TV ratings were down 12.7 percent year over year across the networks of major media companies, according to Nomura Research

That is part of a pattern of declines in linear video consumption that might now be on the verge of accelerating, trends recently highlighted by 21st Century Fox, which cut its revenue forecasts for 2015 because of declining viewership.

Sprint Gains Subs, Loses Operating Income

Sprint posted strong account gains but lower operating income in its latest quarter, adding nearly a million net new accounts, while net operating income dropped two percent and postpaid churn grew slightly.

Those account gains represented net customer additions up 42 percent year-over-year, while postpaid gross additions (not net additions) were at the highest level in three years, Sprint said.

The strong points were the subscriber gains and a shift in the customer mix towards higher-quality. Those gains came at the cost of higher churn rates and a dip in income.

BT Nails Deal to Buy EE

BT Group, Deutsche Telekom and Orange have agreed to terms by which BT will buy EE for £12.5 billion ($18.98 billion) in cash and stock, a move that will put BT back into the consumer  mobile services business after a decade absence, and also merge the U.K.’s largest fixed network operator and the U.K.’s biggest mobile service provider.

As part of the deal, BT will gain 30 million accounts, including some 24.5 million consumer mobile accounts and a Long Term Evolution fourth generation network that covers about 75 percent of potential U.K. customers.

The deal has to be approved by shareholders and regulators, but is part of several trends. European service providers now believe they need more scale to compete, driving mergers and acquisitions.

Also, because of the difficulty of growing in saturated markets, tier one service providers are blending mobile and fixed network services, moving towards quadruple play services (video entertainment, voice, high speed access, mobile).