The planets are aligning for cable company mobile service

BARCELONA, Spain — Forget about Google selling phone service. A far more interesting scenario by far is one in which U.S. cable companies finally leverage their considerable Wi-Fi deployments and infrastructure to launch their own mobile service.

The cable companies are far and away the biggest owner of Wi-Fi hotspots in the U.S. But why they haven’t leveraged all those resources to launch a competitive mobile service is a bit of a mystery.

The cable operators are in a great position to build a network that uses mainly Wi-Fi for data and voice, and then builds a thin LTE network on top to cover people who need mobile Internet outside the reach of those hotspots.

It used to be that wireless (cellular) service was mainly used by people when they were outside or in the car, and too far away to use a land line. That is not at all the case anymore. The research shows that the biggest part of total mobile usage happens indoors. This could be at home, or at work, or in the car, or in the mall.

This means that the majority of phone usage happens within the ever-widening reach of Wi-Fi.

And it is widening. As cable providers deploy more and more hotspots (it’s fairly likely your phone can detect one right now), they also continue to form roaming agreements with other Wi-Fi network operators, like Boingo, to further the reach of their service.

More Wi-Fi roaming options are being built all the time. New York City announced that it would convert 10,000 old pay phones in Manhattan and surrounding boroughs to new Internet stations fitted with Wi-Fi hotspots.

New York leads the trend in other ways. Cablevision recently launched a new mobile service plan where all voice and data service is delivered over a Wi-Fi network. The service is aimed at people whose comings and goings are confined to New York City most of the time. It costs non-Cablevision subscribers $30 a month for unlimited talk, text, and data (cable subscribers get the same package for $10 a month).

Dan Hays, mobile services lead at the consulting giant PwC, believes such offers address a new and growing class of consumers. These consumers are cousins of the “cable cutters.” Hays dubs them the “license losers,” meaning consumers who refuse to buy services based in licensed spectrum.

The drawback of Cablevision’s Wi-Fi-only network, of course, is that there’s no cellular service to keep you connected if Wi-Fi becomes unavailable.

Building an LTE network to back up the Wi-Fi would be an expensive undertaking, but not as expensive as it used to be. And a major cable company that already owns a fiber network could certainly afford it.

One industry source here said that the cable guys would need only to build out a “thin” LTE layer around the existing Wi-Fi network to provide a hybrid service. The service would default to the Wi-Fi service for calls and data, and fail over to the LTE network only when no Wi-Fi was available.

To be sure, a cable company would need to invest in some new infrastructure to create a hybrid Wi-Fi/LTE network. But not much. It would need only to rent tower space from companies like American Tower, which has towers everywhere, and install a certain number of LTE access points across each market serviced.

The cable companies have already built out extensive fiber networks far and wide to deliver video and broadband down to the neighborhood. These fiber networks would be used as the backhaul networks for cable wireless service.

What about spectrum? Well, the cable guys are the perfect candidates to utilize the unlicensed spectrum to run LTE service. This would mean running LTE service on the same band — the 5.8 GHz band — that Wi-Fi runs on. Carriers, infrastructure providers, and regulators have been warming up to the idea of using unlicensed LTE, or U-LTE, to deliver cellular service.

A certain amount of unlicensed spectrum exists today, and the broadcasters will soon be releasing more white space which will be used as unlicensed spectrum.

Whether or not the cable companies will seize on the opportunity to offer a hybrid wireless service is anybody’s guess. Or maybe that’s the idea the cable guys had all along — the reason they set up all those Wi-Fi hotspots and continue doing so.