In Wi-Fi, Comcast sees an opportunity to kneecap wireless providers


David Cohen, executive vice president of the Comcast Corp., testified at a Senate hearing on the proposed Comcast-Time Warner Cable merger last month. (EPA/Michael Reynolds)

In what seems certain to become a wider battle, Comcast is eyeing the wireless industry as a possible market for expansion. Someday soon, the Philadelphia company might be counted among the likes of AT&T, Verizon, Sprint and T-Mobile, the businesses that now provide millions of Americans with mobile voice and data services.

Thanks to a growing network of Wi-Fi hotspots, Comcast is arguing that it, or another company piggybacking off of its technology, could shake up the wireless industry by delivering cheaper cellular service to consumers and introducing another competitor to the market. Comcast is already rolling out the infrastructure it would need for such a push; it operates 1 million Wi-Fi hotspots around the country and plans to expand that to 8 million by year's end.

Comcast says that it has no imminent intention to launch a cellular service. But in April, the cable company raised that possibility as one of several arguments to support its Time Warner Cable purchase.

"A ubiquitous Wi-Fi network built by Comcast could make a 'Wi-Fi-first' service, which combines commercial mobile radio service with Wi-Fi, a more viable alternative," Comcast wrote in its public interest filing to federal regulators.

With the technology, Comcast could route a portion of mobile phone calls over Wi-Fi, which is easy to do from a stationary location but harder to do while a caller is in motion because the call needs to be handed off from one Wi-Fi hotspot to another. Only a few companies, such as Republic Wireless, offer Wi-Fi-first calling right now. If a large company like Comcast can figure out how to do it, it would effectively turn the cable company into a wireless company with the resources to compete with the nation's largest providers.

Despite the technical challenges of Wi-Fi calling, Comcast sees it as an attractive opportunity because it is far less expensive than using traditional cellular networks, which require building large towers and licensing the rights to wireless airwaves.

"The licensed spectrum thing has been so slow, and it's so expensive," said Daniel Berninger, a telecommunications architect and a former employee of Bell Labs. "A call that runs over licensed spectrum is 100 times more expensive than a call that runs over Wi-Fi. That gap isn't going to disappear, because Wi-Fi is getting faster and cheaper."

Launching a Wi-Fi-first wireless company would allow Comcast to undercut other firms in the business while paying them a relatively small amount for cellular capacity that its customers would use only when they really needed it. Berninger estimates that Comcast would come out ahead if it had to pay for licensed airwaves just 15 percent or 20 percent of the time.

Here's a taste of what else may be in store. Comcast could offer its subscribers bundled mobile services alongside its traditional broadband, TV and home phone offerings for a few extra dollars on customers' monthly cable bills. Depending on the quality of the Wi-Fi calls, it might be enough to lure some customers away from AT&T or Verizon.

Comcast could turn to other wireless companies such as T-Mobile and sell them extra Wi-Fi capacity, relieving the load on their cellular infrastructure. This is a bigger deal than you might think: Cisco estimates that about half of all mobile Internet traffic is shunted to Wi-Fi rather than traveling over 3G and 4G data connections. That figure is only going to grow. Because of the tight demand for wireless data, the more a company can push usage onto Wi-Fi, the better. Comcast is that pressure valve.

Comcast isn't the only company that sees an opportunity in Wi-Fi. It, along with Cox, Time Warner Cable and a handful of other cable providers, have teamed up so that any of those companies' subscribers can have access to a shared pool of 250,000 Wi-Fi hotspots across the country.  "The cable guys, they're pretty much in unison in joining forces on Wi-Fi," said Jeff Silva, an independent telecom analyst.

Just how serious is Comcast about getting into the wireless industry? It's hard to say. The company hasn't taken any of the financial or legal steps that would signal a looming entry, said Harold Feld, senior vice president at the consumer group Public Knowledge. "When a company like Comcast starts doing something like this, there's always ripples," said Feld. "They talk to equipment manufacturers and contractors that sell [cellular] services. They do stuff that at least makes it look plausible that are preparatory."

Still, as Wi-Fi calling becomes more reliable with the spread of hotspots everywhere, broadband providers will gain increasing access to an industry that's dominated by just a few national providers.

Brian Fung covers technology for The Washington Post.
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