Shaw Communications Inc. has announced the results of its strategic review of the wireless business opportunity, including the potential value of wireless in the traditional cable bundle, the rapid evolution of wireless technologies, the capital needed to build a competitive wireless network (including additional spectrum requirements), recent changes in the wireless competitive environment, and the impact that wireless would have on long-term shareholder value.
When the corporation first started looking at the wireless opportunity, it saw wireless as a complementary product in a world where broadband Internet access is moving increasingly to wireless devices (smartphones, tablets, laptops, netbooks, etc). A wireless offering could give Shaw a platform from which to extend current services and leverage its broadband, video, voice and content/programming businesses. Editor’s note: this could also translate into a bonus for Canadian programming like Endgame, the Gemini Award-nominated crime drama which many are hoping will be renewed for at least a second season.
However, the economics of a conventional wireless business as a new entrant are extremely challenging. New entrants lack the economies of scale and scope to compete effectively against well established incumbents with ubiquitous coverage, extensive device ecosystems, deep spectrum positions and large retail networks. Even with Shaw’s established base and considerable strengths and assets, the company could not justify a wireless network build at this time.
The corporation believes that a more prudent approach is to provide a managed Wi-Fi network that will allow customers to extend their Shaw services beyond the home. This will achieve the company’s objectives without risking well over $1 billion in capital expenditures on a traditional wireless network build.
As a wireless broadband technology Wi-Fi is evolving rapidly with significant improvements in throughput, coverage and reliability. Wi-Fi technologies are now capable of providing seamless hand-off and extensive metropolitan area coverage. Wi-Fi is in virtually all portable consumer devices and customers are actively seeking Wi-Fi hot spots to reduce data costs and improve their wireless broadband experience. The vast majority of tablets sold to date are Wi-Fi only devices. Wireless broadband is increasingly viewed as a portable and nomadic service for the consumption of media rich content and video.
Major wireless carriers worldwide are deploying Wi-Fi as means of offloading 3G/4G traffic thereby reducing network build costs, and improving capacity and coverage. Shaw believes that cable operators are uniquely positioned to take advantage of Wi-Fi.
In addition, given that Wi-Fi spectrum is free and there are no device subsidies, Shaw can build extensive Wi-Fi coverage at a substantially lower cost relative to a traditional wireless network and still provide customers with an excellent broadband wireless experience.
“We have decided to focus on strengthening our core business and leveraging our media and programming assets to support our leadership position in broadband and video,” said Brad Shaw, Chief Executive Officer of Shaw. “Our decision not to pursue a conventional wireless business is consistent with this strategic approach and our focus on shareholder value.”
Shaw held a conference call earlier today to discuss additional details regarding the announcement, with further news forthcoming.