As mobile data traffic continues to skyrocket, Wi-Fi is getting a lot more attention.
On Thursday, cable companies Comcast Corp. , Time Warner Cable Inc. and Charter Communications Inc., along with tech giants Google Inc. and Microsoft Corp. , are expected to announce a new coalition to bolster efforts to expand access to Wi-Fi.
The group, to be called WifiForward, will add heft to an already strong lobbying effort the companies are making in Washington to increase the allocation of airwaves that make Wi-Fi possible. The companies have already been independently pushing the government to release more spectrum for unlicensed uses, meaning anyone can use the frequencies for things like Bluetooth or garage door openers as long as they don’t cause interference.
The group doesn’t include carriers like Verizon Wireless and AT&T Inc., for which the growing ubiquity of Wi-Fi poses a puzzle. AT&T built its own network of 32,000 Wi-Fi hot spots to unload data and alleviate congestion on its network. But after spending billions of dollars to upgrade to faster, so-called LTE technology, AT&T and its peers are now looking to bring that traffic back.
“We are now at a place where the pricing is right, LTE is performing very, very well, and you want to drive utilization of these networks,” AT&T Chief Executive Randall Stephenson said at an analysts conference in December.
If Wi-Fi becomes too ubiquitous and lets smartphone users avoid upgrading to larger data plans, it could erode carriers’ revenue growth.
“Verizon and AT&T have put all their eggs in the basket of incremental usage for incremental dollars,” said Craig Moffett, senior analyst at MoffettNathanson LLC. With more ubiquitous Wi-Fi coverage, “suddenly it is a whole lot harder to figure out how these companies are going to grow.”
Last year, mobile users in North America consumed an average of about 1.4 gigabytes of data a month, and that number is expected to grow to 9 gigabytes a month by 2018, according to Cisco Systems Inc.
Even more growth is expected over Wi-Fi. About 57% of all mobile data traffic in North America is currently carried by Wi-Fi, and by 2018 that figure is expected to increase to 64%, according to Cisco. All that data congests Wi-Fi networks, too, one of the reasons why WifiForward wants to free up more spectrum.
The focus on Wi-Fi is fueled in part by a belief that data plans offered by wireless carriers are too costly. The chief executive of Motorola Mobility, which also plans to participate in the group, said in an interview in December that the average middle class family can’t afford smartphone data plans, which together can costs hundreds of dollars more a month than home Internet service.
“You’re not going to be able to afford four data plans and four of the highest priced phones for that family,” CEO Dennis Woodside told The Wall Street Journal in December.
Competition among wireless carriers has heated up in the last year, and companies have responded by lowering prices. But increasing smartphone adoption and growing data usage continue to mean higher average bills.
For Google and Microsoft, improving Internet access through Wi-Fi allows more users to access their online services, such as Google search and Bing, thus driving more ad revenue.
It could also help bolster Google’s own Wi-Fi offering. Last summer, Google took over from AT&T as the supplier for free Wi-Fi hot spots at more than 7,000 Starbucks. The search giant also has built a Wi-Fi network covering Mountain View, Calif., where the company is based.
The cable industry’s major players—Comcast, Time Warner Cable, Cox Communications Inc., Bright House Networks LLC and Cablevision Systems Corp.—joined together in 2012 to share their roughly 250,000 Wi-Fi hot spots to provide Internet access outside the home to all their broadband customers, a total of about 41 million.
In the last six months, Comcast has boosted the number of hot spots available to its customers to 1 million, aggressively deploying new high-capacity Wi-Fi routers that beam an additional hot spot inside customers’ homes.
Coverage isn’t nearly good enough to substitute for cellular networks. But the Wi-Fi networks do give the cable companies a toehold to begin offering mobile-phone service, an idea the companies are exploring.
Comcast has already edged into the space by offering a mobile app its voice customers can use to make calls from anywhere that has a wireless Internet connection, including Wi-Fi hot spots.
Several other companies offer Wi-Fi based phone services. Republic Wireless, a carrier based in North Carolina, offers national wireless coverage that relies primarily on Wi-Fi for phone calls and data. When Wi-Fi is unavailable it roams onto Sprint’s network. The system is cheaper to operate, and plans with the roaming option start at just $10 a month.
Time Warner Cable said it is “certainly looking” at that kind of technology and finds those businesses “a really interesting model.” It added however that “we aren’t contemplating or putting out a voice plan at this point.”
As part of a deal to buy spectrum from a joint venture of cable companies, Verizon Wireless agreed in 2011 to sell wholesale access to its network to cable companies.
“It’s largely been dismissed as not a credible alternative to traditional wireless,” Mr. Moffett said of Wi-Fi. “But little by little, that’s becoming less and less the case.”