When Shaw Communications Inc. bought the former CanWest television assets last year, executives trumpeted the possibilities for using that content to market the wireless network they intended to build.
On Thursday, Shaw pulled back from its plans, opting to build a wireless Internet network rather than try to break into the mobile phone market. But amid the concerns about the cost of a wireless venture, the focus on a WiFi Internet product is also a bet on where media content is headed.
The advent of tablets such as the iPad has changed the way people think about media on the go. Where a small smart-phone screen is not ideal for catching up on a football game or the latest episode of a TV show, a tablet is much more suited to video content. Video is also a huge driver of traffic, and consumes much more data usage than browsing a website or sending an e-mail. Wireless providers who have invested in media content, such as BCE Inc., are counting on those changing habits to drive data use on mobile devices on their networks, and in turn drive up revenues.
Shaw is hoping that by building WiFi, it can offer another option for people who want to tap into various forms of media when they're not at home, without maxing out their wireless bills.
"As people become more and more aware of the higher cost of data, they're going to look for alternatives to that cost, and we are that alternative," said Shaw president Peter Bissonnette. "It's data that's driving tablets … Think of those tablets as TVs."
Roughly 5 per cent of Canadians own a tablet device, a number that is expected to double in 2012, according a recent report by the Media Technology Monitor.
"Two years ago, we wouldn't have been talking about tablets. [They]created a whole new category," said DBRS analyst Chris Diceman, adding: "Consumers want content on their timeline, and on the platform they want to watch it on."
Media content is already offered to Shaw subscribers through its Shaw Video on Demand website, which requires a password that allows only the company's customers to view some content. This kind of "authenticated" access model, Shaw hopes, could prevent customers from switching to a competitor.
Building a Wi-Fi network instead of wireless is "a defensive play rather than a revenue play," said Iain Grant, managing director with Seaboard Group, a telecom consulting firm in Montreal.
Since last year's Shaw-CanWest deal, as well as BCE's purchase of CTV's broadcast assets, the industry has been debating possible abuses that could arise from companies owning both TV content and the distribution channels over which that content travels – cable and satellite services and, increasingly, wireless networks.
Shaw's pullback from its mobile network plan removes the possibility that it could horde its content for its own wireless devices. (The CRTC has a temporary ban on all exclusive deals for video content on wireless, while it mulls how to regulate media on new platforms.) But Shaw could still build a mobile TV package for smart phones and offer it to other wireless providers to buy, as BCE has done with its Bell Mobile TV, Mr. Bissonnette said.
So far, most tablet owners use the devices mainly in their home, and not during a commute or at a coffee shop, according to the Media Technology Monitor report. Shaw is betting this will change, but some observers say a WiFi network simply is not as good as the mobile business.
"The potential for monetizing the service seems unclear to us," BMO Nesbitt Burns Inc. analyst Tim Casey wrote in a report Thursday.