Uncommon Wisdom

Sep 6 2011   1:58PM GMT

Cable operators back away from wireless in fast-changing market

Tom Nolle Tom Nolle Profile: Tom Nolle

One of the more interesting wrinkles in the ongoing tablet wars is a decision by more cable companies to back away from any commitments (on their own or as MVNOs) for wireless capabilities. There was a time when everyone thought the quad play was going to be a major requirement, so how did this happen? Apple, in a word, but there’s more.

  • First of all, the iPhone created an appliance magnetism that broke many customers away from having cellular services from their home carriers. It disproved the notion that you could create loyalty with non-functional bundles alone, and that in itself was a major factor in limiting interest in quad-play economics.

  • Second, it has proved more complicated to create FUNCTIONAL bundles, active symbiosis between wireless and wireline, than was previously considered. Yes it’s possible to create apps to let you do something on or with your TV, but for the key youth market, those tools are less interesting because they’re not home anyway. And service-layer technology, an architecture or framework that would let operators (including MSOs) build sophisticated componentized services from features, has been hard to come by.
  • Third, tablets are proving that if consumers have a larger form factor and a place to sit, they will consume “TV Everywhere” . On one hand, this might appear to promote a cable company’s entry into cellular, but it doesn’t for two reasons — usage costs and hospitality hot spots. You don’t have to stream many videos to your tablet to run into extra-cost territory, and in any event, why pay for mobility when you need to sit down to watch?

Since tablet vendors offer WiFi tablets at a much lower cost than cellular-equipped models, more and more consumers are jumping on that approach, and TV Everywhere doesn’t have to include that many places that don’t offer WiFi. I think we’re going to see WiFi exploding at the same pace that tablets have exploded, and I think we’re going to see less focus on “wireless” and more on WiFi. One more reason why the DoJ should let AT&T and T-Mobile merge.

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