Cable Operators Plot Mobile Services Moves

Dec. 18, 2017
With an eye toward increasing revenue and lowering subscriber churn, a growing number of cable operators in the U.S. have either added mobile services to their product portfolios or announced their near-term intention to do so. All have partnered with an existing mobile service provider via mobile virtual network operator (MVNO) arrangements that will complement their existing in-home WiFi capabilities. But at least some have more ambitious plans.

With an eye toward increasing revenue and lowering subscriber churn, a growing number of cable operators in the U.S. have either added mobile services to their product portfolios or announced their near-term intention to do so. All have partnered with an existing mobile service provider via mobile virtual network operator (MVNO) arrangements that will complement their existing in-home WiFi capabilities. But at least some have more ambitious plans.

Mobile Mania

Cable operators are well aware of their customers' interest in consuming content on mobile devices. The initial reaction to this preference in most instances has taken the form of enabling multiscreen content and ad delivery. However, with an eye toward the service delivery capabilities that 5G technology will enable, the past two years have seen Comcast, Charter and, most recently, Altice USA announce their intention to offer mobile services as well. Comcast followed through on that promise earlier this year with the debut of Xfinity Mobile. The company reported that by the end of the third quarter, it had exceeded 250,000 customer lines since the offering launched in May. In addition to supplying a new revenue stream, the availability of Xfinity Mobile as part of a bundled package makes such bundled offerings more appealing to both current and potential customers, Comcast believes.

"Introducing these new products adds value to our customers. As part of a multi-product bundle, [it] deepens our relationship, thus improving retention and, ultimately, benefiting lifetime customer economics for us," stated Michael Cavanagh, senior executive vice president and CFO of Comcast, during the company's third quarter 2017 earnings call on October 26.

Charter and Altice plan to launch their mobile services offerings in 2018. Like Comcast, they will leverage MVNO agreements with established mobile network operators. Comcast and Charter have agreements with Verizon. The agreements derive from Verizon's 2011 purchase of Advanced Wireless Services (AWS) spectrum from a consortium of cable operators including Comcast, Cox, Bright House Networks and Time Warner Cable, the latter two of which Charter purchased last year. The spectrum sale agreement included a provision that would enable the consortium members to trigger an MVNO relationship with Verizon; both Comcast and Charter have pulled that trigger. Altice, meanwhile, struck a separate MVNO agreement with Sprint.

The MVNO route offers a common – and common sense – approach for cable operators to enter the mobile services market, say Steve Plain, strategy product manager within the CTO Office for Amdocs Open Network, and Daljit Lobana, engineering lead, network services, at Amdocs, a company that has worked with cable operators to add mobile services capabilities in various markets around the world. After all, the mobile operator has an existing network and access to spectrum – all a cable operator has to do is interface to it.

The WiFi network provides a ready access point for mobile services.
But some cable operators plan to add others.

Well, that's not exactly all. As Lobana explained in a recent edition of the SCTE∙ISBE LiveLearning Webinars™ for Professionals, the cable operator must decide how much of the responsibility for customer management and customer experience it initially wishes to assume. The relationship can run from "light" to "heavy," in Lobana's estimation, and frequently evolves towards the cable operator assuming an increasingly large role.

That evolution often comes with an infrastructure component, in the form of the addition of evolved packet core (EPC) capabilities and additional access points for "densification." With the impending availability of 5G technology, we can expect to see cable operators investigate the deployment and operation of small cell infrastructures toward the latter goal. For example, Charter described in an Ex Parte filing with the FCC this past October its intentions to follow this strategy. (The agreement between Sprint and Altice calls for Sprint to build the small cells, supported by Altice's wired infrastructure.) Charter described in the filing field tests it has underway to test current small cell and point-to-point wireless technology.

Densification through the deployment of small cell infrastructure is
expected to be a widespread trend. (Source: Verizon)

To make such small cells feasible, the cable operator requires two primary ingredients. The first is spectrum. Fortunately, the FCC will soon make available a band of spectrum, called the Citizens Broadband Radio Service (CBRS, not to be confused with Citizens Band Radio Service). Operating in the neighborhood of 3.5 GHz, CBRS will work well with small cells and access to it will be relatively economical to obtain. But for the moment it has a few features that are less than ideal for cable operators' mobile aspirations. First, each Priority Access License (PAL) covers only as much as a census area, which is inefficient for the creation of a wide-ranging small cell network. Second, the licenses can't be renewed.

Fortunately for cable operators, the FCC is considering changing the rules. This proposed rule change prompted the Charter filing. "Charter supports license areas that are bigger than census tracts for operational purposes, but to promote wireless competition and more expansive network deployment, Charter urged the FCC to adopt licenses sizes that are no bigger than counties," read the filing, which described a meeting between the operator and FCC staff. "Charter pointed out that small cell technology is not well-suited for large geographic area licenses. Smaller license sizes will enable new entrants, like Charter, to tailor their investment and deployment plans by leveraging existing infrastructure."

That infrastructure represents the second major primary ingredient. The small cells need to be connected to centralized nodes (likely as part of a centralized and/or cloud radio access network) and onward to other nodes deeper in the network, depending upon the endpoints of the mobile session. While analysts and others debate the roles fiber and millimeter-wave wireless will play in such connections, cable operators are confident their hybrid fiber/coax networks will meet their needs, particularly as DOCSIS 3.1 and Distributed Access Architecture roll out.

"Charter's existing hybrid fiber/coaxial (HFC) network provides the backhaul, power and location to rapidly deploy small cells for the provision of wireless broadband service," the company asserted in the FCC filing.

Cisco and CableLabs presented a demo of DOCSIS in a wireless backhaul application at SCTE Cable-Tec Expo in October to prove this point. "Classically, everyone's used fiber to hook up macrocells, but there are not a lot of them. And when you put 10 or 20 times more of them out there, you really need something much less expensive to hook them up," John Chapman, Cisco Fellow and CTO of Cable Access at Cisco, told Broadband Technology Report at the show. "And with the cable plant already in place, the ability to adapt the cable plant to be reused as backhaul really lowers the cost."

The DOCSIS network will have to be able to transmit timing information; the Cable-Tec demonstration showed techniques to reduce the latency on DOCSIS links to levels more friendly to small cell support, another prerequisite. "Cable operators wanting to provide backhaul in a 5G world will need to ensure that they deliver on the scale and clocking requirements. Additionally, they will want to address the requirements for greater coverage, lower latency and higher resiliency," confirmed Dan Kurschner, 5G marketing lead for Cisco Systems, in an email to Broadband Technology Report.

More to Come?

Given the momentum Altice, Comcast and Charter have created, it would seem inevitable that other cable operators will explore adding mobile services to their product mix. Cox briefly flirted with a mobile service offering early in this decade, again via an MVNO relationship, but shut down the service in 2011. Management hasn't yet committed to another try. The company does have an agreement in select markets with Verizon in which Cox's video and broadband services can be bundled with Verizon mobile services.

Meanwhile, smaller operators may be left to wonder if the MVNO route is open to them or just to the major few. "The [mobile operators] I've spoken to, they would prefer to engage with large-scale customers who would become an MVNO," allowed Plain, who hails from the UK. "But they'll also work with small ones as well. One of the things about the MVNO model is that it does accommodate smaller players. In the UK, we have supermarkets who have become an MVNO."

Smaller operators hopefully won't have to open a grocery stores to get into the mobile services business in the U.S. But as their telco competition begins to experiment with wireless-based broadband, particularly in rural areas, adding some sort of mobile capability may prove as attractive, and perhaps necessary, as it now does to their larger brethren.

Stephen Hardyis editorial director of Broadband Technology Report.

Find out if Mobile Services are Right for You

You can now view on-demand the December 2017 SCTE∙ISBE LiveLearning Webinars™ for Professionals webcast, produced by BTR, "Exploring Cable Mobility." This webinar will explore key factors that MSOs should consider and outlines viable strategies for successfully entering the mobile game. Register for the webinar and view it now!