Yesterday, after months of speculation, Calgary's Shaw Media announced that they would not be getting into the cell phone game.
After acquiring much expensive spectrum, it was expected that they'd beef up their delivery systems by rolling out a mobile phone unit in order to compete with vertically integrated communications-content-delivery companies like Rogers and Bell. But they said, "Um, no. We're not going to do that. Too expensive."
Why? I have a theory.
I may be wrong, but I haven't seen any pundits mention this anywhere yet.
Building out a cell phone network from scratch is expensive. Hideously expensive. Even with the amount of money a company like Shaw Media is capable of raising and investing, they'd have a long, long way to catch up to the infrastructure of Bell, Rogers and Telus. And technological developments being what they are (e.g. the network upgrade from 3G to LTE), it's only going to get more expensive and confusing.
So does this mean Shaw will surrender their wireless spectrum? Hardly. Instead, they're announced that they're going to build out a WiFi infrastructure.
Yes, other companies have tried this with mixed success. But then look at the timing of the Shaw announcement. It came a few hours after most over-the-air analogue TV signals disappeared from Canadian airspace, freeing up that juicy 700 MHz spectrum. The timing was deliberate.
The 700 MHz spectrum is lusted after because (a) digital signals using those frequencies can travel dozens and dozens of miles. Maybe even a hundred miles. That means fewer towers are need to provide fat broadband wireless pipes; and (b) unlike normal cell phone signals, these frequencies have no trouble penetrating walls.
Compare that to the current level of WiFi technology where you're lucky to cover your entire house with an access point. To cover any meaningful geography, you need hundreds and thousands of access points or some kind of elaborate mesh network. While great for short-distance work--think of the WiFi you can get at your local Starbucks--WiFi isn't much use beyond that.
But building out a WiFi network using the 700 MHz spectrum is a different matter. A few big towers can cover thousands of square kilometres. Infrastructure build-out costs drop exponentially. And things get interesting for the consumer.
Now instead of paying Rogers 40 bucks a month for a SIM card so your iPad can access the Internet anywhere, you merely use its WiFi radio (and not worry about the extra cost of buying a 3G-enabled tablet).
Suddenly, using Facetime on an iPhone doesn't require to find a WiFi access point first.
And what if all automobile manufacturers were to build WiFi radios into the dashboard?
Now extrapolate all those technological advantages to how you access and search for music. And entertainment. And news. And communication.
Shaw Media already has hundreds of thousands of cable subscribers across Western Canada and are quickly approaching the point where they won't be able to grow that part of the business anymore. And then there's the issue of cord-cutting where people are abandoning cable TV for things like Netflix and YouTube and over-the-air digital TV. Shaw could offer this network to subscribers as a way of giving them better service, especially mobile service.
It's a big gamble on Shaw Media's part. But it just might work.