Luxurious wireless industry profits of up to 50 percent earned from selling some of the world’s most expensive cellular services may soon be a thing of the past as Google and Cablevision prepare to disrupt the market with cheap competition.

With more than 80 percent of all wireless data traffic now moving over Wi-Fi, prices for wireless data services should be in decline, but the reverse has been true. AT&T and Verizon Wireless have banked future profits by dumping unlimited data plans and monetizing wireless usage, predicting a dependable spike in revenue from growing data consumption. Instead of charging customers a flat $30 for unlimited data, carriers like Verizon have switched to plans with voice, texting, and just 1GB of wireless usage at around $60 a month, with each additional gigabyte priced at $15 a month.

With the majority of cell phone customers in the U.S. signed up with AT&T or Verizon’s nearly identical plans, their revenue has soared. Sprint and T-Mobile have modestly challenged the two industry leaders offering cheaper plans, some with unlimited data, but their smaller cellular networks and more limited coverage areas have left many customers wary about switching.

Google intends to remind Americans that the majority of data usage occurs over Wi-Fi networks that don’t require an expensive data plan or enormous 4G network. The search engine giant will launch its own wireless service that depends on Wi-Fi at home and work and combines the networks of Sprint and T-Mobile while on the go, switching automatically to the provider with the best signal and performance.

Cablevision’s offer, in contrast, will rely entirely on Wi-Fi to power its mobile calling, texting, and data services. Dubbed “Freewheel,” non-Cablevision customers can sign up starting in February for $29.95 a month. Current Cablevision broadband customers get a price break — $9.95 a month.

Cablevision’s dense service area in parts of New York City, Long Island, northern New Jersey and Connecticut offers ample access to Wi-Fi. Cablevision chief operating officer Kristin Dolan said its new service would work best in Wi-Fi dense areas such as college campuses, business districts, and multi-dwelling units.

New York City is working towards its own ubiquitous Wi-Fi network, which could theoretically blanket the city with enough hotspots to make Cablevision’s service area seamless. But the biggest deterrent to dumping your current cell phone provider is likely to be available coverage areas. Google’s answer to that problem is combining the networks of both Sprint and T-Mobile, offering customers access to the best-performing carrier in any particular area. While that isn’t likely to solve coverage issues in states like West Virginia and the Mountain West, where only AT&T and Verizon Wireless offer serious coverage, it will likely be sustainable in large and medium-sized cities where at least one of the two smaller carriers has a solid network of cell towers.

Comparing the Wireless Alternative Providers

• Google Wireless will offer seamless access to Wi-Fi, Sprint and T-Mobile voice, SMS, and mobile data at an undetermined price. Likely to arrive by the summer of 2015;
• Cablevision Freewheel depends entirely on Wi-Fi to power unlimited voice, SMS, and data. Launches in February for $29.95/mo ($9.95/mo for Cablevision broadband customers);
• FreedomPop Wi-Fi ($5/mo) offers an Android app-based “key” to open unlimited Wi-Fi access to 10 million AT&T, Google, and cable industry hotspots nationwide for calling, texting, and mobile data;
• Republic Wireless developed its own protocol to properly hand off phone calls between different networks without dropping it. Calling plans range from $5-40 a month. Less expensive plans are Wi-Fi only, pricier plans include access to Sprint’s network;
• Scratch Wireless charges once for its device – a Motorola Photon Q ($99) and everything else is free, as long as you have access to Wi-Fi. Cell-based texting is also free, as a courtesy. If you need voice calling or wireless data when outside the range of a hotspot, you can buy “access passes” to Sprint’s network at prices ranging from $1.99 a day each for voice and data access to $24.99 a month for unlimited data and $14.99 a month for unlimited voice.

Scratch Wireless

Google is pushing the FCC to open new unlicensed spectrum for expanded Wi-Fi to accommodate the growing number of wireless hotspots that are facing co-interference issues.

Wi-Fi-based wireless providers are likely to grow once coverage concerns are eased and there is reliable service as customers hop from hotspot to hotspot. The cable industry has aggressively deployed Wi-Fi access with a potential to introduce wireless service. Comcast is already providing broadband customers with network gateways that offer built-in guest access to other Comcast customers, with the potential of using a crowdsourced network of customers to power Wi-Fi coverage across its service areas. FreedomPop will eventually seek customers to volunteer access to their home or business networks for fellow users as well.

AT&T and Verizon are banking on their robust networks and coverage areas to protect their customer base. Verizon Wireless, in particular, has refused to engage in price wars with competitors, claiming Verizon customers are willing to pay more to access the company’s huge wireless coverage area. AT&T told the Wall Street Journal its customers want seamless access to its network to stay connected wherever they go.

Verizon’s chief financial officer Fran Shammo appeared unfazed by the recent developments. On last week’s conference call with investors, Shammo dismissed Google’s entry as simply another reseller of Sprint’s network. He added Google has no idea about the challenges it will face dealing directly with customers in a service and support capacity. While Google’s approach to combine the coverage of T-Mobile and Sprint together is a novel idea, Shammo thinks there isn’t much to see.

“Resellers, or people leasing the network from carriers, have been around for 15 years,” Shammo said. “It’s a complex issue.”

Investors are taking a cautious wait-and-see approach to the recent developments. Google’s new offering is likely to offer plans that are philosophically compatible with Google’s larger business agenda. Challenging the traditional business models of AT&T and Verizon that have implemented usage caps and usage pricing may be at the top of Google’s list. The new offering could give large data allowances at a low-cost and/or unlimited wireless data for a flat price. Such plans may actually steal price-sensitive customers away from Sprint and T-Mobile, at least initially. Sprint is clearly worried about that, so it has a built-in escape clause that allows a termination of its network agreement with Google almost at will.

[flv]http://www.phillipdampier.com/video/WSJ Google Cablevision Challenge Wireless Industry 1-26-15.flv[/flv]

The Wall Street Journal talks about the trend towards Wi-Fi based mobile calling networks. (1:59)

Marriott’s Gaylord Opryland Resort in Nashville made sure it had a corner on the Wi-Fi market by blocking the competition and charging $250-1,000 to gain access to the hotel’s Wi-Fi.

Marriott International, Inc. and its subsidiary, Marriott Hotel Services, Inc., have been fined $600,000 after a Federal Communications Commission investigation uncovered hotel employees intentionally interfering with personal Wi-Fi networks during convention events, forcing guests and exhibitors to use the hotel’s Wi-Fi network, at a cost of up to $1,000.

The FCC Enforcement Bureau, in response to a guest’s complaint that the hotel was intentionally jamming every Wi-Fi network except their own, discovered hotel workers were using a Wi-Fi monitoring system at the Gaylord Opryland in Nashville to prevent visitors from using their personal mobile broadband hotspots, a serious violation of Section 333 of the Communications Act.

Employees of Marriott, which has managed the day-to-day operations of the Gaylord Opryland since 2012, were tasked with using features of the hotel’s Wi-Fi monitoring system at the Gaylord Opryland to contain and/or de-authenticate guest-created Wi-Fi hotspot access points in the conference facilities. In some cases, employees sent de-authentication packets to the targeted access points, which would dissociate consumers’ devices from their own Wi-Fi hotspots and lock out the devices to keep them from connecting in the future.

Guests and exhibitors arriving expecting to use their AT&T, Verizon, Sprint or T-Mobile mobile hotspots found them completely disabled while on the property. Even adjacent Wi-Fi networks from nearby properties stopped working the moment users entered or approached the hotel grounds.

At the same time the hotel was blocking connections, Marriott charged conference exhibitors and guests dependent on Wi-Fi to run their exhibits or manage business matters connection fees ranging from $250-$1,000 per device for access to the Gaylord’s Wi-Fi network, the only network available.

“Consumers who purchase cellular data plans should be able to use them without fear that their personal Internet connection will be blocked by their hotel or conference center,” said Enforcement Bureau chief Travis LeBlanc. “It is unacceptable for any hotel to intentionally disable personal hotspots while also charging consumers and small businesses high fees to use the hotel’s own Wi-Fi network. This practice puts consumers in the untenable position of either paying twice for the same service or forgoing Internet access altogether.”

Marriott claimed they were just protecting their guests from cyber attacks and the FCC’s decision to fine the hotel has created confusion across the hospitality industry.

“Marriott has a strong interest in ensuring that when our guests use our Wi-Fi service, they will be protected from rogue wireless hot spots that can cause degraded service, insidious cyber-attacks and identity theft,” Marriott said in a statement. “Like many other institutions and companies in a wide variety of industries, including hospitals and universities, the Gaylord Opryland protected its Wi-Fi network by using FCC-authorized equipment provided by well-known, reputable manufacturers. We believe that the Opryland’s actions were lawful. We will continue to encourage the FCC to pursue a rule making in order to eliminate the ongoing confusion resulting from today’s action and to assess the merits of its underlying policy.”

Several hotel chains have turned to Internet connectivity as a revenue generator, but few hotels have asked as much as Marriott. Some hotel chains charge as much as $22 per day for permission to connect to the facility’s Wi-Fi network, convincing many guests to use their own personal mobile devices as Wi-Fi hotspots instead. But Marriott’s debacle with the FCC allowed several chains to get an edge on the competition and trumpet they are not in the Wi-Fi jamming business:

• Hilton Hotels:  “We do not block or jam any wireless transmissions at our properties;”
• Kempinski and Hyatt Hotels: There are no policies that allow our hotels to jam, block or prevent guests’ use of personal Wi-Fi hotspots;
• InterContinental Hotels Group (Candlewood Suites, Crowne Plaza, Even, Holiday Inn, Holiday Inn Express, Hotel Indigo, Hualuxe, InterContinental and Staybridge Suites) has no problem with guests using personal networks on hotel property, but why bother when any guest can enroll in the IHG Rewards Club at no charge which gives them free unlimited access to the chain’s Wi-Fi;
• The majority of Wyndham’s hotels are independently owned and operated, but most already offer complimentary Wi-Fi to guests, according to a hotel spokesperson.

Marriott was convinced it was not in violation of the law because it was not using an illegal signal jammer, commonly available overseas and often used in restaurants and theaters to silence cell phones. Marriott’s guests could still make and receive phone calls and text messages. But the Enforcement Bureau found that argument uncompelling after discovering hotel employees intentionally targeting any non-hotel hotspots they could locate to disconnect or block consumers from using them.

The $600,000 fine, the first of its kind for an incident of this kind, won’t mean much to the Marriott Gaylord Opryland. For staying at one of the hotel’s 3,000 rooms, Marriott charges $18 a day in “resort fees” for the “free Internet access,” $6.99 a day for enhanced Internet speed “suitable for downloading files, video chat and video streaming,” and $21-28 a day to park your car there.

But the FCC enforcement action has put a stop to this kind of access blockade spreading further. Under the terms of Marriott’s agreement with the FCC announced today, Marriott must cease the unlawful use of Wi-Fi blocking technology and take significant steps to improve how it monitors and uses its Wi-Fi technology at the Gaylord Opryland. Marriott must institute a compliance plan and file compliance and usage reports with the Bureau every three months for three years, including information documenting any use of access point containment features at any U.S. property that Marriott manages or owns.

The cable industry believes the majority of America not using the Internet remain offline by choice.

The National Cable Telecommunications Association (NCTA) says the digital divide is not their fault. Price have very little to do with it, according to an NCTA infographic showing just 6% cite “cost” as the main reason they are not signed up for Internet service.

“Cable has made extensive efforts to connect all Americans to the Internet. And while high-speed Internet adoption has rapidly increased in the United States, still too many low-income families remain unconnected and are at risk of falling behind in the global information economy,” writes NCTA blogger John Solit. “Connecting all Americans in order to bridge the digital divide and expand the availability of broadband service remains a national goal embraced by cable companies. In a recent blog post, David L. Cohen, Comcast Executive VP & Chief Diversity Officer said, “[I]n just over two years through our Internet Essentials program, Comcast has connected an estimated 1 million low-income Americans, or more than 250,000 families, to the Internet at home.”

The “digital divide” — broadband have’s and have-nots — has been a regular topic among regulators and legislators for more than a decade. A suspicion that cost is a major factor keeping people from signing up could result in legislation compelling providers to offer low-cost Lifeline broadband service to the income-disadvantaged. In the last three years, the cable industry has tried to fight off that type of approach with voluntary programs that selectively target non-customers.

Comcast’s Internet Essentials provides 5/1Mbps service for $9.95 a month, but signing up isn’t easy.

The discounted service is available only to families with school-age children that qualify for the school lunch aid program. Comcast often promotes its discount program to legislators and others in the industry as an example of the voluntary effort the cable industry is making to solve the digital divide. Target customers who most likely qualify for the service are not going to learn about it through television ads or cable company mailers targeting low-income zip codes. Most of Comcast’s marketing effort is in cooperation with area schools.

Ironically, Comcast’s Internet Essentials actually forces some people to temporarily give up Internet access if they want to participate.

Customers must be current on their Comcast bills and must not have a subscription to any Comcast Internet service for the last 90 days to receive consideration. If you already have Comcast broadband service, you must disconnect it for at least three months before you can apply for Internet Essentials.

This requirement is designed to protect Comcast’s bottom line. Why offer a discount to customers already willing to sacrifice for home Internet service at Comcast’s regular price?

“How is this helping me and my family out,” asks one Tennessee customer who tried to sign up for Internet Essentials but couldn’t because they were already paying for Comcast Internet service. “The Comcast representative said that if I wanted to be enrolled in the program I would have to discontinue my Internet service for 90 days and then reapply. We have the Economy Internet Promotion and pay $19.95 per month. After the promotion ends our fee will increase to $26.95 a month. In our current economy and financial situation saving $17 per month would greatly help our family to keep our service. I will not rest until I find a solution to this problem. My children at least deserve that.”

Comcast also makes it its business to check your household to make sure at least one child still qualifies for the National School Lunch Program. The company reserves the right to immediately cancel service if you miss a payment or move. Participants also must not upgrade, alter or change Comcast service for any reason or risk being removed from the program.

Comcast’s Wi-Fi Ban

Shapiro

One of the most annoying conditions of the Internet Essentials program is that it does not allow Wi-Fi access.

Phil Shapiro, who refurbishes donated computers and distributes them to needy families regularly runs into Comcast’s Wi-Fi ban — a significant issue for larger families that need to be online concurrently.

“I’ve taken three donated computers to [one] family and I was expecting to get them all online with this cable modem service,” Shapiro tells The Hechinger Report.  “But not so fast. Comcast’s telephone tech support tells me that Internet Essentials users cannot use Wi-Fi with their cable modems. Nowhere in Comcast’s printed literature or on the website is this limitation mentioned. Naturally, families who sign up for Internet Essentials get confused about this, but they are not well positioned to advocate for their needs.”

Charlie Douglas, a Comcast spokesperson, confirms that Internet Essentials does not offer Wi-Fi service, although he noted a customer could theoretically buy a wireless router themselves and use that to provide wireless connectivity. But that isn’t what Comcast’s technical support team recommends. Any deviation from the terms of the service offered to Internet Essentials customers could lead to an immediate disqualification. Comcast defines Internet Essentials as a wired service, including one outlet and a basic (not wireless) modem.

“The family that I was helping patiently waited for me while I talked on the phone,” said Shapiro. “They could see that I spoke very politely with the tech support person. They also saw that I had reached the end of my patience.”

A representative told Stop the Cap! Internet Essentials accounts have insufficient bandwidth and speed for Wi-Fi service, so it is not offered.

Shapiro dismisses Comcast’s explanation. Many public Wi-Fi networks offer even slower service than Comcast.

Douglas defended Comcast’s policy noting families served by the program don’t miss Wi-Fi and don’t need it.

But those using tablets might disagree, and with an increasing number of students using them as school textbooks are gradually phased out, Wi-Fi will only grow in importance.

Many large school districts, including Los Angeles, are introducing Wi-Fi only tablets for student use because they are cheaper and easier to support. When Internet Essentials participants ask about Wi-Fi access with the discounted broadband service, Comcast representatives are trained to up sell customers out of the program and sign them to a more costly plan than includes built-in Wi-Fi support.

Customers can successfully, if covertly, connect a router with Wi-Fi capability to the basic cable modem supplied by Comcast and configure wireless Internet Essentials service. But there are no guarantees Comcast will not give customers grief about it, if they wish.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Comcast Internet Essentials Key Milestones 11-13.mp4[/flv]

Comcast produced this video marking the start of the second year of its Internet Essentials program. Chicago Mayor Rahm Emanuel gushed Internet Essentials was “top of the line” Internet access. He was joined by other recognizable political leaders and the former chairman of the Federal Communications Commission Julius Genachowski. (2:47)

A new research report issued by Time Warner Cable concludes cell phone companies like AT&T and Verizon Wireless cannot meet the future data demands of customers over their 4G LTE wireless networks without punitive usage caps and high fees to deter usage, even with new spectrum becoming available for the wireless industry’s use.

The report, authored by Michael Calabrese of the New America Foundation, finds an answer to this problem in Wi-Fi, which can offload wireless traffic and deliver wireless service customers already prefer:

There is simply not enough exclusively licensed spectrum to meet the rapidly rising demand for wireless data, to sustain a competitive market, and to keep prices at an affordable level.

Major mobile carriers are increasingly coming to grips with this reality. The Wireless Broadband Alliance, a global industry group, reports that Wi-Fi offloading has become an industry standard as “18 of the world’s top 20 largest telcos by revenue have now publicly committed to investing in deploying their own Wi-Fi Hotspot networks.” The industry is shifting steadily toward what it calls heterogeneous networks (HetNets)—i.e., a combination of licensed and unlicensed infrastructure—in order to meet their customers’ insatiable demand for data while keeping costs down.

Alcatel-Lucent forecasts an increase of “87 times [the current] daily traffic on wireless networks” over the next five years, with 50 percent of that traffic on cellular networks “while the remaining 50 percent will be offloaded to Wi-Fi.”

Cisco’s own studies back Calabrese’s findings on consumer preference towards Wi-Fi.

“Given a choice, more than 80 percent of tablet, laptop, and eReader owners would either prefer Wi-Fi to mobile access, or have no preference,” Cisco concluded. “And, just over half of smartphone owners would prefer to use Wi-Fi, or are ambivalent about the two access networks.”

The Cisco surveys found users are choosing Wi-Fi over mobile connectivity for reasons of cost, “because it doesn’t impose data-usage caps or reduce their mobile data plan quotas.” But the primary reason for choosing Wi-Fi “is that respondents find it much faster than mobile networks.” And since Wi-Fi traffic travels over increasingly upgraded wireline networks, that speed differential may only increase as more and more homes, businesses and retail outlets upgrade to fiber optic or other high-speed connections of 100Mbps or more.

America’s largest wireless carriers have fallen far behind offering Wi-Fi services to customers compared to their overseas colleagues:

• AT&T: More than 32,000 Wi-Fi hotspots are available at partnered retail businesses, restaurants, and high-traffic areas like stadiums and major tourist destinations;
• Verizon Wireless: Verizon has an insignificant Wi-Fi presence, with a small number of unadvertised hotspots in selected venues like airports and convention centers;
• Japan’s NTT DOCOMO: Up to 150,000 hotspots, up from only 8,400 in 2o12.
• China Mobile: More than 2 million hotspots are up and running carrying 70 percent of the company’s data traffic.
• France’s Free Mobile: More than 4 million residential hotspots are available through Free’s parent – Iliad.

Comcast could soon be the nation’s largest Wi-Fi hotspot provider.

Calabrese argues it is important for the United States to set aside significant spectrum for unlicensed wireless networks like Wi-Fi to meet future wireless demands. Currently, some Republican members of Congress are opposed to significant spectrum set asides they feel could best be monetized for private use through the spectrum auction process.

It is no coincidence that Calabrese’s findings would be released by Time Warner Cable which itself is growing a Wi-Fi presence in certain cities where it provides cable service.

The wireless carriers’ collective lack of interest in an aggressive nationwide Wi-Fi deployment may have provided a strategic opening for cable operators to fill that gap with Wi-Fi networks of their own. Cable operators consider them a useful tool to retain customer loyalty — access is typically free and unlimited for current customers.

This summer, Comcast announced a “neighborhood hotspot initiative” that will turn millions of customer cable Internet connections into shared Wi-Fi hotspots using a dual-use wireless home gateway. The equipment will offer two separate Wi-Fi signals — one intended for the customer and the other open for use by any Comcast customers in the neighborhood. The cable company will provision extra bandwidth for the open Wi-Fi network to ease concerns that guest users could theoretically slow down a customer’s own Wi-Fi channel. In a relatively short period, Comcast could become the nation’s biggest Wi-Fi network offering more than 20 million hotspots hosted by the company’s own broadband customers.

Calabrese points to the future of seamless transitions between wired, wireless 4G and Wi-Fi network access without dropping calls or data connections. Many customers won’t even know the difference.

The author recommends the FCC think about reserving space for new unlicensed “citizens band” frequencies dedicated for public and private Wi-Fi networks:

• The FCC should reorganize the UHF TV band to ensure the availability of at least 30 to 40MHz of unlicensed spectrum in every media market, perhaps including Channel 37 (now reserved for radio astronomy) and eliminating two dedicated channels reserved for wireless microphones;
• Open the grossly underutilized 3.5–3.7GHz federal band for unlicensed small cell antennas delivering a ‘Citizens Broadband Service.’ This band is now mostly used for offshore naval radar, allowing both services to co-exist without mutual interference;
• Expand unlicensed access to the 5GHz band by allocating the 5.35–5.47 and 5.85–5.925GHz bands providing contiguous, very wide channels useful for the 802.11ac Wi-Fi standard that can support very high-speed wireless services.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/XFINITY Wireless Gateway Powers Connected Home Summer 2013.flv[/flv]

Comcast talks about their new X3 Wireless Gateway which is capable of providing two separate Wi-Fi networks, one for the customer and another for the neighborhood. (2 minutes)

An upstart telecom company has thrown the French mobile market into competitive chaos offering customers unlimited voice, messaging, and certain data services for around $26 a month. Now the company is expanding its footprint by offering free femtocells to customers that can be shared by other customers, according to a report by GigaOm‘s Kevin Fitchard.

France’s Free Mobile is everything North American cell phone providers are not. The company offers dirt cheap, often unlimited service (their backup HSPA+ roaming data network has a 3GB limit), crowdsourced public Wi-Fi networks run by its customers, and soon an even more robust network made possible by handing out network extender devices at no charge, improving indoor reception and data speeds.

Free offers more than just mobile services. Its home broadband service offers 40-100Mbps Internet service, offering plenty of bandwidth to accommodate shared connections.

Freebox home Internet gateway, now including a free femtocell.

Back home in the United States and Canada, cell phone companies ask customers to pay up to $300 for network extender devices to manage reception your provider was supposed to deliver in return for paying them nearly $100 a month. The femtocells connect to a customer’s home broadband connection to make and receive calls. Despite the fact customers are using their own broadband service to power the device, cell phone companies still deduct minutes, texts, and data from monthly usage allowances just as if one was using a nearby cell tower.

Free Mobile customers don’t have to deal with any of that. In return for helping improve the company’s cellular network, customers will get the network extender devices, known as femtocells, free after a nominal shipping charge. New customers will have the femtocell technology built right into Free Mobile’s Freebox Revolution gateway.

Parent company Iliad is depending on its generous customers to help extend the network while keeping prices low for everyone. Considering the costs, few object to sharing a negligible part of their broadband connection with other customers, especially with millions of potential connection points sharing the load.

French cell phone users have a lot to thank Iliad for, even if they are not Free Mobile customers. The appearance of Free Mobile on the scene sparked a massive price war that is delivering savings to every French mobile user.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Free Freebox Server 6-13.mp4[/flv]

Introducing the Freebox Server, a home gateway cool enough to put on your desktop. (1 minute)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Free Designer Starck talks about the Freebox 6-13.mp4[/flv]

Only in France will you find providers spending as much time and attention on the stylish details of a set-top box as they do fretting about its cost. To underline the point, designer Philippe Starck turned up on Free’s website to talk about his design philosophy for the gateway device. (3 minutes, French)