In the spring of 2011, just months after becoming chief executive officer of Shaw Communications Inc., Bradley Shaw took a trip to the United States that changed his view of the wireless industry.
While south of the border, he dined with his friend Thomas Rutledge. An industry veteran, Mr. Rutledge is best known these days as CEO of Charter Communications Inc., the man who spearheaded a now-foiled takeover of Time Warner Cable Inc. But at the time of that meal, Mr. Rutledge was chief operating officer of Cablevision Systems Corp., a cable company that had launched a WiFi network.
“We talked quite a bit about it and the opportunity – and what they were seeing and where it was going,” Mr. Shaw said. “I really respect Tom because he is one of the top operators, for sure, in the U.S. in cable. And so that helped – helped formulate and understand that it’s such a natural [evolution] from broadband.”
Mr. Shaw was intrigued by what he heard about how Cablevision’s customers were using WiFi.
Months later, Mr. Shaw surprised investors by nixing his company’s plan to launch a cellphone network after spending $189.5-million on spectrum. Instead, Shaw would roll out a less costly WiFi network as an extension of its high-speed Internet service.
Shaw embarked on a pilot program in late 2011. Then the company went quiet, making very few public statements about its plans for WiFi, including how it planned to make money off a service that most consumers were already using for free in coffee shops and public libraries.
It was a silence that perplexed some Bay Street analysts who were chronicling the market share gains in TV and Internet that chief rival Telus Corp. was making at Shaw’s expense.
With its mainstay cable business already under attack, industry watchers were concerned that Shaw’s inability to compete in the cellphone market would prove an insurmountable hurdle in its battle for Western Canada.
The stakes are high. Consumers in British Columbia and Alberta use more data on the Internet than other Canadians. For that reason, Shaw is focused on differentiating its high-speed Internet service in order to regain an upper hand on Telus.
Shaw is making WiFi the “centrepiece” of a new strategy to become its customers’ “primary network” both inside and outside the home. Although other Canadian companies also offer WiFi services, Shaw’s approach is unique among big cable companies because it is not using it to complement an existing cellphone service.
Now the right conditions appear to be in place for Shaw to make a breakthrough. Although consumers are still upgrading to the latest smartphones, WiFi use on those devices is exploding in Canada and other markets.
That trend could spell increased opportunities for Shaw, which officially launched its WiFi network in September. Global carriers are experimenting with ways to monetize their WiFi networks at a time when consumers are devouring increasing amounts of mobile video.
In fact, WiFi now accounts for about 78 per cent of the data consumed on smartphones, according to a new international report by consultancies Mobidia Technology and Informa Telecoms & Media. The report bases its findings on an analysis of 10 countries that lead in the rollout and usage of ultra-fast LTE (long-term evolution) networks. “The challenge is to prevent WiFi from eroding the mobile data business model, and the opportunity is to better integrate WiFi with other mobile and fixed broadband networks to provide an improved end-user experience,” the report said.
As a result, Shaw is positioning the Internet, rather than cable, as its new anchor product. And it is betting that the surging popularity of WiFi will help it turn the tables on Telus over the years to come.
Putting the Internet front and centre is a familiar refrain. About 13 years ago, when high-speed Internet was still a relatively nascent market, Shaw launched its “March to a Million” campaign – an offensive to reach one million subscribers.
Fast forward to 2014, and the company’s battle plan has shifted from customer acquisition to customer retention. Shaw has nearly 1.9 million Internet customers compared with roughly 1.4 million at Telus. Although a small number of Telus’s base remains on dial-up service, the Vancouver-based telco is gaining share of high-speed customers thanks to its Optik product that offers both Internet and TV service.
Shaw Internet customers are given “free” access to the Shaw Go WiFi network, which includes more than 30,000 hot spots across the country in markets from Victoria to Sault Ste. Marie, Ont. – communities in which Shaw already has operations. After signing up for the service, Shaw customers are able to use a range of WiFi-enabled devices, such as smartphones, laptops and tablet computers, to access the Internet while in those various hot-spot zones.Report Typo/Error
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