Bloomberg News

Comcast to Share Internet Hot Spots With Cable Partners

May 21, 2012

Comcast Corp. (CMCSA:US), the biggest U.S. broadband provider, is teaming up with other large cable companies to create a nationwide network of Wi-Fi hot spots, helping them fend off competition from phone carriers.

Time Warner Cable Inc. (TWC:US), Cablevision Systems Corp., Bright House Networks LLC and Cox Communications Inc. are part of the pact, according to a statement from the companies today. The five cable carriers will let one another’s Web customers connect laptops, tablets and other mobile devices to their Wi-Fi networks in metro areas, totaling more than 50,000 hot spots.

The cable providers are trying to ward off phone companies such as Verizon Communications Inc. (VZ:US) and AT&T Inc. (T:US), which are expanding onto their turf by offering TV and broadband access in addition to wireless and land-line phone connections. By boosting free wireless-Internet coverage, the cable carriers are attempting to give customers another reason to stay.

The “strategic implications are profound” for a nationwide connected Wi-Fi network, said Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York.

Theoretically, a cable customer could be able to connect to a Wi-Fi network in the home, at work and in popular city locations -- such as coffee shops and shopping malls -- and not need a separate wireless account, he said in a note to clients.

‘Dirty Little Secret’

“The dirty little secret of the wireless industry is the vast majority of usage comes from very limited places,” Moffett said. “If the cable companies can get that piece of the puzzle, they can do something interesting.”

Comcast, Time Warner Cable, Cox and Bright House also have agreements with Verizon’s wireless business to market and sell its mobile product with their cable services.

Shares of Comcast, based in Philadelphia, rose 1.5 percent to $28.71 at the close today. New York-based Time Warner Cable added 3.4 percent to $76.58. Cablevision (CVC:US), based in Bethpage, New York, climbed 2.9 percent to $11.41.

The accord will allow the cable companies to study whether Wi-Fi service helps them reduce customer defections, increase satisfaction scores, and connect more devices to their network, Pat Esser, president of closely held Cox, the third-largest U.S. cable company, said in an interview. Cox will spend much of 2013 building access points, particularly in high-density population areas in northern Virginia and Connecticut, he said.

Testing Phase

“This gives us an opportunity to work with our peers to do a trial,” Esser said. “This gives us a chance to figure out the value proposition of Wi-Fi.”

Comcast announced last week that it would eliminate caps on monthly usage for broadband customers and instead charge users who consume more than 300 gigabytes per month. Wi-Fi usage counts against the threshold, Neil Smit, Comcast’s cable president and chief executive officer, said today.

“Consumers are adding Wi-Fi connected devices every day, but they don’t want to pay for service plans for every one of them,” said Tom Nagel, Comcast’s senior vice president and general manager of wireless services. “We want to provide connectivity a little broader than the home, including inside of businesses that become broadband customers of ours.”

As part of the Wi-Fi accord, Cablevision and Bright House already started sharing their Wi-Fi networks in the New York area and central Florida earlier this month.

In 2010, Cablevision, Comcast and Time Warner Cable entered into a regional agreement allowing customers in New York City, Long Island, New Jersey, Philadelphia and Connecticut to access one another’s Wi-Fi hot spots.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • CMCSA
    (Comcast Corp)
    • $55.41 USD
    • 0.42
    • 0.76%
  • TWC
    (Time Warner Cable Inc)
    • $151.42 USD
    • 1.56
    • 1.03%
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