Seeking an edge with regulators, Comcast dangles the idea of a Wi-Fi-first mobile network

The Comcast-Time Warner deal may not do anything to spur competition in broadband, but it might give consumers additional options for connecting their smartphones, tablets and laptops. In its 180-page merger filing with the FCC, Comcast(s cmsca) confirmed what we’ve suspected all along: it’s weighing using its growing footprint of wireless home gateways and outdoor hotspots to create a “Wi-Fi-first” network that could both complement and supplant the carriers’ 4G data networks.
I say both complement and supplant because such a Wi-Fi network would take enormous quantities of data traffic off traditional cellular networks, but because of the range limitations and concentration in dense populated areas, mobile data networks would need to fill the gaps in between.

Source: Getty Images / William Thomas Cain:

Source: Getty Images / William Thomas Cain:

Comcast didn’t say whether it is considering offering such a hybrid mobile service itself or selling Wi-Fi access capacity to carriers, who could use it to amp up speeds and capacity available in cities and other high-demand areas. As I’ve written before, it could do both. Since it sold its 4G spectrum to Verizon(s vz) in 2012, Comcast has gotten cozy with the country’s largest mobile carrier, making it a likely candidate for such a partnership. Verizon could sell 4G access to Comcast outside of its footprint in exchange for access to Comcast’s Wi-Fi networks. The Information today got independent confirmation Comcast is investigating just such a partnership with a mobile provider.
Comcast didn’t go into any details about what such a Wi-Fi network would look like, and there’s the chance this all could be a ruse. Comcast could just be holding out the carrot of a 4G alternative to convince regulators to approve the deal. But the filing leads little doubt that Comcast plans to invest heavily in Wi-Fi. It referenced Wi-Fi 36 times in the filing, and noted it’s already built a network of 870,000 hotspots, compared to the 29,000 operated by Time Warner(s twc).
Comcast's hotspot network in the mid-Atlantic (source: Comcast)

Comcast’s hotspot network in the mid-Atlantic (source: Comcast)

The reason Comcast’s network has grown so large is because it’s been turning its residential and business customers’ broadband gateways into hybrid public-private access points. Comcast began the rollout in June so only a small percentage of its broadband customers have the new gateways, but considering 8 million broadband customers get their Wi-Fi routers from Comcast, that footprint can grow considerably larger.
Basically Comcast’s Wi-Fi strategy has three prongs: neighborhood hotspots through these hybrid gateways, retail hotspots in local businesses like coffee shops, and high-powered outdoor hotspots it hangs off its own pole-strung cables in high-traffic areas such as commercial shopping areas, parks and busy intersections. A fourth prong is its membership in the CableWiFi consortium, giving its customers access to the hotspots provided by other cable operators.
That will give Comcast dense clusters coverage in key areas, but solely using Wi-Fi solely as a mobile data service has many limitations. Even in dense clusters of access points, there are still plenty of gaps between Wi-Fi “cells,” to say nothing of the vast Wi-Fi-free expanses outside of metro areas.

The CableWiFi network is focused narrowly at big cities, leaving huge coverage gaps (Source: CableWiFi)

There’s no seamless handoff between Wi-Fi nodes, meaning the network functions best when users are standing still. And then there’s interference: A powerful Wi-Fi node could provide much more capacity than an LTE cell, but it relies on unlicensed airwaves, forcing it to compete with a myriad of other access points and other devices for spectral bandwidth.
That’s why it would be critical for a 4G network to provide a ubiquitous layer of coverage to fill in those gaps and supplement capacity. It’s a model that other carriers are proving out, though, most notably France’s Free Mobile, which uses a network of more than 4 million residential access points as the backbone of its voice and mobile data service. Comcast could easily do the same, offering cheap data buckets and expanding its Voice 2Go VoIP calling service to any manner of smartphone or tablet.
So does all this amount to a good reason for regulators to approve the Comcast-TWC deal? Not necessarily.
There’s big difference between broaching the possibility of competing mobile carrier and actually committing to building one. Also, Comcast doesn’t need Time Warner to make any of this happen. Comcast already has access to Time Warner’s hotspots – along with the hotspots of several other cable operators – through the CableWiFi partnership. Just as Comcast doesn’t need to buy a mobile operator to make Wi-Fi-first work, it also doesn’t need to buy another cable operator.