Wednesday, August 31, 2011

Shaw Plans Wi-Fi Build-out Rather than LTE for Western Canada

Shaw Communications, which delivers cable television, High-Speed Internet, and home phone services to 3.4 million customers in Canada, will forgo the construction of an LTE network in favor of a carrier-class Wi-Fi network.

Shaw, which holds approximately 20 MHz of AWS spectrum across western Canada and had been targeting early 2012 for its wireless launch, decided against LTE because it believes it can build extensive Wi-Fi coverage across its territory at a substantially lower cost relative to a traditional wireless network and still provide customers with an excellent broadband wireless experience. The company estimates that it would cost at least $1 billion to build a competitive LTE network in western Canada.

Shaw said it finds the economics of a conventional wireless business as a new entrant are extremely challenging, whereas because Wi-Fi spectrum is free and there are no device subsidies, cable operators such as itself are uniquely positioned to take advantage of Wi-Fi.

"We have decided to focus on strengthening our core business and leveraging our media and programming assets to support our leadership position in broadband and video," said Brad Shaw, Chief Executive Officer of Shaw. "Our decision not to pursue a conventional wireless business is consistent with this strategic approach and our focus on shareholder value."

Shaw noted that Cablevision has implemented a successful Wi-Fi strategy that extends the value of its core cable services outside of the home. It also opens the possibility for Shaw to provide Wi-Fi offload services for other 3G/4G operators.

Shaw confirmed that it is negotiating with Cisco about the Wi-Fi build. Shaw did not rule out the possibility of bidding for 700 MHz spectrum in the next auction.

  • During its FY 10 and FY 11, Shaw has invested an estimated $180 million on its wireless network launch, including back office systems, towers, fibre and retail facilities.

  • In July 2008, Shaw acquired 20 MHz of spectrum across its cable operating footprint for a total of
    $190 million. This represents less than 5% of the total AWS auction proceeds.