When Shaw Communications Inc. president Peter Bissonnette was recently in New York City for business, he brought along his tablet computer to use the hotel’s Wi-Fi access.
“I could pick up 50 Wi-Fi networks,” he recalled in an interview Thursday, but the one in the hotel didn’t work.
“The perception is there’s a lot [of Wi-Fi] out there,” he said, “but they don’t have the robustness we’re going to be building.”
He was talking about the expansive Wi-Fi network Shaw is in the early stages of building in Western Canada in place of a cellular network. In 2008 the cable company paid $189 million for in spectrum in four provinces, but in September decided it would be too expensive to move build a cellular business.The service, dubbed Hotspot 2.0, is undergoing early testing now by core network provider Cisco Systems Inc.
Unlike existing Wi-Fi networks offered in coffee shops, Hotspot 2.0 will have two versions: Standard and secure. The secure network will be encrypted for those who want the best in security.
For Shaw’s fixed broadband customers (but not customers who only take cable), both services will be free.
Organizations will be able to buy access to the secure network, Bissonnette said.
Shaw has about 1.8 million Internet customers across British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.
The new Shaw network will be “where ever our customers are,” he said. Think of arenas, malls, hospitals, libraries and along light rail transit systems.
Here’s another way to think of it: Outside of residential areas, Bissonnette envisions erecting 60,000 access points in a number of cities.
Phase one of the service will start in Vancouver, Calgary and Edmonton in either February or March, Bissonnette said. Coverage will expand in those cities and others over the next three years.
For the fiscal year ending Aug. 31 Shaw [TSX: SJR.B] had net income of $562 million on $4.74 billion in revenue.
Although some financial analysts are scratching their heads over the strategy of giving up cellular, which is expanding around the world, Bissonnette said Wi-Fi offers many advantages. For one thing, he said, Shaw won’t be subsidizing handsets like Apple’s iPhone, which is a major drain on carriers like Rogers Communications Inc.
Wi-Fi is a way of reducing the likelihood of Internet customers leaving for other providers, or, in Bissonnette’s words, “a churn-reducing strategy.”
If Shaw Wi-Fi is extensive enough, is the reasoning, it’s a value-add to a broadband subscription. And, Bissonnette added, it gives Shaw the ability to be more flexible on pricing than other Internet providers.
Shaw is also counting on its Wi-Fi network being rugged enough that cellular carriers like Rogers and others will contract with it for backhauling their signals when traffic gets heavy. And, Bissonnette said, there’s advertising potential in offering service in public areas like arenas and malls.
Shaw’s model is Cablevision System Corp., which has an extensive Wi-Fi network in New York City and parts of New Jersey. Like Cablevision, Shaw plans to allow residential subscribers to register up to four Wi-Fi devices per household.
Bissonnette said he is also looking into the technical feasibility of creating Wi-Fi roaming deals with Wi-Fi providers in other cities, so Shaw customers could use their devices free on networks outside of the cable company’s coverage.
As for cellular and all that spectrum Shaw owns, Bissonnette said the value of it isn’t going to decline. Because the spectrum is contiguous with Rogers’, he said the Toronto cable company should see its value.
He did leave the door open a crack about Shaw one day getting into cellular, perhaps by leasing spectrum from Rogers and becoming a mobile virtual operator.
As for eventually building a cellular network of its own, it’s possible, Bissonnette said, “but not likely.”