- further monetize the company’s investments in millions of in-home dual-SSID WiFi gateway devices;
- provide it with a relatively low-cost, high-margin entry into the wireless market space;
- give it a powerful position in the emerging market for nomadic, multiscreen multimedia services and;
- strengthen its overall market power in the communication sector as a whole.
In this two-part post I’m going to consider this same topic, but from a public policy perspective.
Viewed in very broad strokes, we have on one hand the potential benefits from what could be a new and attractively priced competitive option in the wireless sector. On the other hand, we have a range of complex and intertwined public policy issues related to the continued expansion of Comcast’s market power across multiple sectors of the communications industry, and the prospects for anti-competitive impacts of that expansion.
Here in Part 1 I’m going to focus on Comcast’s use of dual-SSID in-home gateways to deploy a network of millions of public access hotspots while:
1) charging customers $10 per month to lease gateway devices that provide them with a private in-home WiFi network while also being used by Comcast as a public-access hotspot;
2) using these customers’ electricity to power these dual-use gateway devices;
3) activating the gateway’s public hotspot capability with an opt-out (vs. an opt-in) option that has been criticized as “difficult to use or broken.”
In Part 2 I’ll consider the competitive impacts of this strategy in the broader context of Comcast’s unique mix of market power in both the distribution and content sectors.
In my earlier post I noted that, in Comcast’s yearend earnings call, CFO Michael Angelakis told Wall Street analysts that Comcast’s investments in dual-SSID in-home WiFi gateway devices offers “great returns on their own and…seed us for different businesses that are attractive going forward.”
While clearly good for Comcast (as Angelakis’s comment suggests), a separate set of policy-related questions concerns whether the company’s approach to deploying, utilizing and paying for dual-SSID gateways provides net benefits to Comcast customers and the public interest.
Plaintiff Toyer Grear and daughter Joycelyn Harris of Alameda County, California, filed the suit on December 4…in US District Court in Northern California, seeking class action status on behalf of all Comcast customers who lease wireless routers that broadcast Xfinity Wi-Fi hotspots. “Without authorization to do so, Comcast uses the wireless routers it supplies to its customers to generate additional, public Wi-Fi networks for its own benefit,” the complaint states.
Grear and Harris allege that Comcast violated the US Computer Fraud and Abuse Act as well as California laws on unfair competition and computer data access and fraud. They claim that the public hotspots, broadcast from the same equipment used for subscribers’ private Wi-Fi networks, raise customers’ electricity costs and harm network performance…The lawsuit [also] claims that “unauthorized broadcasting of a secondary, public Wi-Fi network from the customer’s wireless router subjects the customer to potential security risks”…
While Comcast says the public hotspots use different bandwidth than is allocated to a customer’s home Internet service, the lawsuit argues that they can create wireless congestion in areas with many Wi-Fi networks.
Comcast acknowledges that there could be a performance hit because the Wi-Fi networks use shared spectrum, but it says it designed the system “to support robust usage” and that there should be only “minimal impact.”
Brodkin also cites complaints at online user forums that Comcast’s home hotspot opt-out functionality is “difficult to use or broken.” But he also notes that Comcast customers retain the option of purchasing their own modem and router to avoid having to deal with this issue.
I’d add to this my own recent experience when I raised this issue with a Comcast technician who came out to deal with problems I was having with my Internet service (mainly very slow and erratic speeds, especially when using the WiFi connection to Comcast’s dual-SSID gateway device).
I mentioned to him that I was considering replacing the Xfinity gateway device with my own modem and router, to avoid both the home hotspot feature and the monthly gateway rental fee, which had increased from $8 to $10 in December (according to DSLReports this fee generates for Comcast well over a billion dollars in high-margin annual revenue). To my surprise, he told me this would not eliminate the external hotspot feature. I’m pretty confident he’s wrong about this, which suggests that Comcast’s techs (or at least this particular one) are either uninformed on this subject, or are intentionally providing misinformation to convince customers to keep the gateway devices in their home.
The technician also asserted to me, as if it was a fixed law of physics, that I should expect to get roughly half the speed I get with a wired connection when I use WiFi, even though I told him I usually get a pretty strong signal (4 or 5 bars) on my laptop. He also reminded me that the 25 Mbps download speed I’m signed up for is an “up to” speed. So we walked through the following math, which he suggested is typical and what I should expect: the “actual” (vs. “up to” speed) I might get via a hardwire connection to my gateway device might often be only in the 16-20 Mbps range which means that, at those times, I should expect my WiFi connection to be in the 8-10 Mbps range.
My recent experience is generally consistent with another Comcast customer I know who lives in a different state. As he explained to me, after Comcast installed the gateway device in his home, connection speeds were lower and more erratic for his mainly-WiFi-connected devices. As a result, the company installed an extra gateway device (which costs him an extra $10/mo.). Even after this was done, WiFi connection speeds in his home are not as good as they were prior to the installation of the gateway devices.
Though these personal experiences may be atypical and/or caused by other factors, they do bring to mind Comcast’s acknowledgement “that there could be a performance hit because the Wi-Fi networks use shared spectrum.” And they raise questions about the company’s claim that it has designed the system “to support robust usage,” and that there should be only “minimal impact” from the use of dual-SSID devices.
One step toward answering these questions would be an independent and unbiased research project focused on the use, technical performance and impacts of dual-SSID gateways, with specific consideration of how they are being used by Comcast, Cablevision and other broadband service providers.