(Adds statement from KDDI, 10th paragraph)
By Liana B. Baker
NEW YORK May 12 Comcast Corp is
giving at least two Asian cellular operators access to its WiFi
hot spots in the United States, in trial partnerships that
illustrate the cable company's ambitions to compete with U.S.
The deals with Japan's KDDI Corp and Taiwan Mobile
Co Ltd allow their subscribers to use Comcast's WiFi
hot spots when they travel to the United States, reducing the
international roaming charges that they would otherwise have to
pay, according to a Comcast spokesman.
Comcast has been steadily building out its WiFi network and
said last week that it aims to have 8 million hot spots by the
end of the year, covering 19 of the 30 largest U.S. cities. The
No. 1 U.S. cable company is also seeking U.S. regulatory
approval to buy Time Warner Cable Inc, which now has
34,000 WiFi hot spots.
If the merger is approved, the combined company would have a
nationwide footprint that could potentially challenge the
dominance of U.S. telecom giants Verizon Communications Inc
and AT&T Inc, an idea that Comcast floated in an
April 8 regulatory filing touting the deal's benefits.
Since that filing, investors have been trying to figure out
what Comcast and other cable companies might be planning do in
the mobile market. The topic came up frequently in the latest
round of quarterly earnings calls.
Cable is "well positioned to enter the wireless voice and
data market with costs that are lower than those of existing
wireless carriers," New Street Research analyst Jonathan Chaplin
said. "This could be truly disruptive, with grave implications
for new entrants and established wireless carriers alike."
Comcast has adopted a more cautious tone. "We view WiFi and
cellular as complementary. There are many different situations
and applications where consumers may prefer one or the other,"
said Tom Nagel, Comcast's senior vice president and general
manager of wireless services.
Comcast has not disclosed how much it is charging KDDI and
Taiwan Mobile in these deals, which were signed earlier this
year. The amounts are thought to be small since WiFi data fees
are typically much lower than wireless data charges.
A representative for Taiwan Mobile confirmed the Comcast
partnership and directed Reuters to a website promoting the
offer to its subscribers. The website said subscribers normally
pay T$4 per minute ($0.13/minute) to use Comcast WiFi, but a
promotion lasting until the end of June this year cuts that to
T$2 a minute ($0.07/minute).
A representative for KDDI said "our aim is to expand WiFi
network range in the United States for KDDI users."
U.S. pay TV and phone companies are casting around for new
business models amid sky-rocketing growth in mobile Internet
use. Satellite TV provider Dish Network Corp has spent
billions of dollars on wireless spectrum, and DirecTV is
working with financial advisers on a possible merger with AT&T.
Even though cable WiFi networks are a potential competitor
to wireless networks, Comcast's Nagel said he believes cable and
telecom companies could partner to make sure customers' devices
can more easily move between their networks.
"One day it should be that Sprint, or any wireless
carrier, and Comcast can identify each other's devices and
networks. For example, Sprint's device finds a Comcast access
point and says 'Hey, I think I can get on your network," Nagel
Building a wireless network from scratch is something cable
companies considered over the past few years but never committed
to due to the high costs involved.
One advantage cable companies have is a large amount of
fiber wire in the ground, known as "backhaul," which they
already rent out to wireless companies to handle data traffic.
While cable companies have bought and sold wireless spectrum
before, analysts say the quickest way for a cable company to get
into the cellular market would be to rent airwaves from wireless
companies through a mobile virtual network operator agreement,
or MVNO. Such an agreement would give cable companies wireless
cover for areas outside the range of WiFi.
New Street Research estimates that Comcast, which already
has MVNO agreements with Verizon and Sprint, could capture about
6 percent of the retail wireless market within five years after
its acquisition of Time Warner Cable.
(US$1 = T$30.14)
(Additional reporting by Marina Lopes in New York and Michael
Gold in Taipei; Editing by Tiffany Wu and Tom Brown)