WiFi Lives Large for Comcast, Cablevision

WiFi Lives Large for Comcast, Cablevision WiFi was on the mind during quarterly and year-end financial conferences calls by Cablevision (NYSE:CVC) and Comcast (NASDAQ:CMCSA) last week.

In 2014, Cablevision launched a new WiFi Smart Router and surpassed 1 million Optimum access points within its service area. WiFi usage continued to increase, with customers using more than four times the amount of data during the fourth quarter of 2014 than they did during the comparative timeframe last  year.

Cablevision also deployed Freewheel, a WiFi-only smartphone that delivers data, voice and text wherever WiFi service is available. James Dolan, CEO and director, called the initiative the company's "most recent effort to monetize investment in WiFi," which he said is "one of our most strategic assets."

Consumers will continue to grow more reliant on WiFi, Dolan said, because their data usage is increasing and because more types of consumer electronics are connected using WiFi (as evidenced by many of the products on display at the Consumer Electronics Show in January).

"Connectivity, particularly on a wireless basis, is going to become more and more important to our consumers," Dolan said. "We want to be the company that's seen as being the best at providing that connectivity." He called this the first part of a "wave," with the second part being products and services that go along with this strategic position.

"... the first of which you've just seen, which is Freewheel. But there will be others, and we feel that we will be poised and ready to take advantage of the strategic position that we've created by investing in WiFi to do that," Dolan said, noting that connectivity has surpassed video as the primary product for his company.

"We need to continue to strategize our product offerings to reflect that with different packaging, etc., which is something I think we will do in 2015," Dolan said.

Incidentally, one market for Freewheel has been expatriates and people who travel internationally on a regular basis. "Because they're able to maintain a U.S. phone number, they don't incur any roaming charges when they're on WiFi, either in their hotel or particularly in the UK, where there's a lot of WiFi available, and throughout Europe," said Kristin Dolan, COO and director. "This is one of the interesting opportunities for us that we've uncovered as we started rolling out Freewheel."

What the Freewheel strategy is not about, Kristin Dolan said, is chasing the cellular markets to be a mobile phone provider. "It's a product that has the data and also makes phone calls and texting," she said. "WiFi was built for data, and we don't see any indications that people's thirst - aggressive thirst - for data is going to decline."

Comcast said it now has a WiFi network that includes more than 8 million hotspots, including in-home and outdoors. Brian Roberts, chairman and CEO, said the company continues to work on how to "monetize the asset and bring it to market" over the coming months.

When asked if Comcast is looking at mobility more as a way to mobilize products it already offers or as a potential new business, Roberts was non-committal, saying it could be "one or both." More than 41% of its customers visited the My Account app for customer services in December, and the video apps in the mobile space have been "getting a lot of usage."

"Clearly WiFi is a great asset," Roberts said. "It's got a lot of carrying capacity ... the more bits that are traveling over a network, the more buyable that WiFi network connected to a wired network becomes."

On other topics, Comcast Cable increased revenue 5.5% during 2014 and added 358,000 customer relationships, which represents a 67% improvement compared to 2013. In broadband, 1 million subscribers were added for the ninth year in a row. The focus continues to be on bundling, however. At the end of the year, 69% of customers subscribed to two or more products, and 37% subscribed to three products, compared to 35% at the end of 2013.

Comcast added 6,000 video customers during the fourth quarter, which is the third time a gain was achieved in the last five quarters. For 2014, video losses were reduced by 27% to 194,000, which the company says is the best result in seven years.

Returning to Cablevision, Gregg Seibert, vice chairman and CFO, said the company's Lightpath business services network expanded to 7,400 buildings during 2014, which represents an increase of 600 connections. Building count, he said, matters "a lot," but it "matters in two directions." Margins have been expanding, not just because new buildings with anchor tenants are being lit, but also because the company is "doing a better job" of marketing to secondary tenants.

"We don't have to light a new building in the Lightpath business in order to generate incremental revenue," Seibert said.

(Thanks to SeekingAlpha.com for the transcripts of the conference calls.)

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