There are even opportunities to provide WiFi services to other types of businesses, such as agriculture. Some vineyards, for instance, are already putting WiFi tags in the ground to measure temperature and humidity, while mining companies are using those tags to actively monitor equipment for wear and tear, according to Cisco Canada, which sells WiFi equipment.
“We have the advantage of time. And others have gone before us, so there is a ton of knowledge that we were able to benefit [from],” said Greg Pultz, Shaw’s group vice-president of WiFi.
But the financial rewards are unclear.
“I think the challenges associated with Shaw’s WiFi remain monetizing the product because consumers expect free WiFi, and differentiating the product from the free WiFi that is already there,” said telecommunications analyst Dvai Ghose of Canaccord Genuity, who is known for his bearish views on Shaw’s stock, which he rates a “sell.”
There are also other hurdles to overcome. Anyone who has used a public WiFi network in a coffee shop or quick-serve restaurant will have seen warnings to be wary of conducting sensitive communications, such as mobile banking, over public networks. But experts say new technology has addressed many of the security risks.
That is largely because early WiFi networks, such as those used in mom-and-pop coffee shops, did not use encryption technology. As a result, consumers have been left with the impression that modern WiFi networks are less secure than their cellular counterparts. Carrier-grade WiFi networks use security precautions, such as user authentication and scrambling of messages, but consumers may not make the distinction. And, ultimately, consumers must bear the responsibility of ensuring their WiFi-enabled devices are equipped with current anti-virus and anti-malware software.
“The security issue will always be an issue. Let’s be clear,” said Ahmed Etman, general manager of enterprise networking and security with Cisco Canada. “The impression that the WiFi network is less secure than the wired, I totally disagree with this – especially in the enterprise context” because companies view those networks as more sensitive and take numerous precautions.
And there are some challenges that even the most sophisticated equipment are still unable to resolve. For instance, the quality of voice communications over WiFi, whether they be videocalls on FaceTime or Skype or other voice over Internet protocol apps, can be spotty if there are too many users on the network or if a consumer is walking around.
Now that Shaw’s WiFi rollout is picking up steam and poaching some data traffic from rival cellular networks, investors are curious about how Telus will strike back.
Last year, the Vancouver-based telco quietly began deploying “small cells,” mini cellular antennas that are used to bolster coverage and capacity, in Western Canada as a complement to its main cellphone networks. Small cells, which provide a WiFi-type service using both licensed and unlicensed airwaves, enable carriers to “offload” data traffic from their cellular networks thereby preventing congestion in areas teeming with smartphone users.
“We’re deploying it throughout Western Canada where it makes sense for our customers – where ... data demand is high and people congregate. Malls and places like that,” said David Fuller, Telus’s chief marketing officer.
As smartphone users consume increasing amounts of data on LTE networks, global carriers are expected to ramp up their small cell deployments over the next two years.
“LTE-4G is great but it is unable to penetrate concrete and in urban/densely populated areas, mobile operators need to increase the network capacity and to ensure that their customers are not experiencing call drops/inconsistent services. Small cells deliver upon these needs,” said Patrick Ostiguy, CEO of Accedian Networks, a Montreal-based company that creates hardware and software solutions for mobile networks.
Telus has been stealing market share from Shaw ever since launching Optik TV and Internet product in mid-2010. Executives estimate that nine out of 10 customers combine TV and Internet with Telus.
According to the companies’ latest financial results (which span different reporting periods), Telus added more than 38,000 net new customers for television during its fourth-quarter (the three months ended Dec. 31, 2013), while Shaw lost about 29,600 during its fiscal first quarter (ended Nov. 30, 2013).
On high-speed Internet, meanwhile, Telus added 21,000 customers, compared with more than 2,700 for Shaw during those same reporting periods. “Not only are we winning on TV, I believe we are fundamentally winning on Internet,” added Mr. Fuller.
Back in Calgary, Shaw executives don’t see it that way. Jay Mehr, chief operating officer, chalks up Telus’s gains to nothing more than old-fashioned discounting.
But Mr. Shaw doesn’t see the point of engaging in price war with Telus for short-term gains, when the company has a new Internet strategy to retain and win new customers for the future.
“We’re cable guys. We want to win. We’ve always won ... I realize that and we have to do it differently.”
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