Philip Hunter /
08.15.2011 04:15 PM
UK pay TV operators eye Wi-Fi for last mile

The prospect of Wi-Fi delivering TV services over the last mile to homes has come closer in the UK following recent developments by the leading two pay TV operators there, BSkyB and Virgin Media, with other contenders such as BT and O2 also stepping up their hot spot expansion plans. At present the objective is to provide access to video content outside the home in public hot spots as part of TV Anywhere strategies, but as blanket coverage is approached at least in urban areas, the option for delivering premium services to the home will arise. More likely though is that Wi-Fi will become the preferred technology for widespread wireless broadband distribution to smart phones and tablet devices, given the failure of 3G and emerging 4G cellular networks to enable sufficient QoS for mobile TV on larger screens.

Indeed the gap between consumer expectations of service on tablet devices and what they can get on 3G was cited by Virgin Media as a factor in its decision to roll out a public Wi-Fi network across London. Virgin Media chief executive Neil Berkett confirmed earlier this month that his company was in advanced discussions with local government agencies in London to roll out Wi-Fi across the capital at a cost of a several million pounds ($5 to $10 million). As a sweetener Virgin Media is considering offering free access to everyone, but only at a low speed of perhaps 500kb/s, with full access at say 10Mb/s confined to its pay TV or broadband subscribers. Another motive was that Virgin Media's cable based broadband infrastructure is currently underutilised in London, providing scope for using it to backhaul its proposed Wi-Fi network.

Above all though Virgin Media, which has 4 million subscribers, needs to keep pace with arch rival BSkyB, which has 10 million. BSkyB is taking a different tack to Wi-Fi, having spent almost £50 million in January 2011 to acquire a network of 5000 Wi-Fi hotspots in the UK through its purchase of The Cloud for almost £50 million. The Cloud also has a further 17,000 or so hot spots around Europe, enabling BSkyB to provide its subscribers with access to the services while travelling abroad. There is also scope for BSkyB to provide paid service via Wi-Fi across Europe. Indeed BSkyB's Wi-Fi strategy seems more strongly focused on TV than Virgin Media's, being aligned with its Sky Go multiscreen service rebranded in June 2011, combining the previous Web-based Sky Player with Sky Mobile TV. BSkyB contends that its customers will be able to enjoy full broadcast quality services on tablet devices from Wi-Fi hotspots without worrying about quality as they would with 3G.

BSkyB's strategy also differs from Virgin Media's in that The Cloud hotspots it acquired are provided from business premises rather than publicly owned ones, mostly in retailers or restaurants. The aim for these businesses is to attract customers by offering free Wi-Fi access combined with some specific apps. One of The Cloud's customers, Pizza Express, which offers Wi-Fi in all its restaurants, has a downloadable app allowing customers to order food from the table via an online menu. Now there is the prospect of incorporating Sky TV services into the deals with joint promotions and advertising. Indeed BSkyB this month recruited the Harvard consultancy group to help attract more business partners for The Cloud as part of its expansion. BSkyB is also considering bringing Wi-Fi right to the home as an access option for wireless devices in the belief that this can provide a better controlled service with guaranteed QoS than Wi-Fi set up by customers themselves.

One thing Virgin Media and BSkyB do have in common is a belief that existing subscribers should not have to pay twice for their pay TV services and that multiscreen access should therefore be free to them. Being addicted to ARPU (Average Revenue Per Unit) like many pay TV operators, BSkyB originally charged its subscribers an extra premium both for mobile TV and Sky Player, the two components of the current Sky Go package. But Sky learnt the error of its ways and so access to SkyGo is now thrown in free with the overall pay TV package.

BSkyB and Virgin Media also face competition from incumbent Telco BT, which on paper has a far larger number of hot spots, around 2 million, but most of these are residential Wi-Fi networks that have agreed to give up some of their bandwidth for public access in an interesting model whose success has yet to be proven. The number of dedicated public hot spots in BT's OpenZone national Wi-Fi network is much less, a few thousand in airports, hotels, train stations and businesses. BT itself has an IPTV pay service called BT Vision, and plans to align that with the forthcoming You View online TV platform in 2012.

Another big UK Wi-Fi contender is mobile operator O2 owned by Spanish incumbent Telco Telefonica, which is building a network of 15,000 Wi-Fi hotspots due for completion in 2013, offering download speeds up to 24Mb/s.



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