SJR Shaw Communications Inc

North American Cable MSOs (multi-service operator) Comcast Corporation (CMCSA) and Shaw Communications Inc. (SJR) are expanding their Wi-Fi hotspot deployments in order to compete better with telecom carriers who are intruding into their video market.

Comcast has begun deploying hotspots in Chicago and Atlanta while Shaw has announced a deal with Edmonton City Council to expand its Wi-Fi network across the city.

Comcast, which competes with AT&T Inc. (T) in Chicago, has more than 1,000 hotspots across the city and around 350 hotspots in the metro area of Atlanta. Comcast is offering the service under the Xfinity brand and is available for free to its broadband subscribers. Non-subscribers will get a six-week trial pack, post which, they will have to pay $3 per hour or $8 per day for the service.          

As per the five-year agreement with Edmonton City Council, Shaw will deploy 1,500 hotspots across 63 different public avenues. This new hotspot rollout will be in addition to the 3000 already deployed in Edmonton.The hotspots will be available to both subscribers and non-subscribers in public areas for free.

Along with the launch in Atlanta and Chicago, Comcast has 56,000 Wi-Fi hotspots across the U.S., covering major cities like Boston, New Jersey, Philadelphia and parts of California. On the other hand, Shaw, which concentrates on the western part of Canada, now covers four of the biggest markets including, Calgary, Winnipeg, Edmonton and Vancouver.  

In the recently concluded quarter, both Shaw and Comcast’s top lines failed to meet the Zacks Consensus Estimate due to losses of its video customers. Comcast lost 60,000 video customers while Shaw lost 29,829 cable customers in the recently ended quarter. 

Cable MSOs in the U.S. have been facing fierce competition from telecom carriers, who are rapidly gaining market share by offering fiber-based TV and other high-speed broadband services. Additionally, video streaming companies like Netflix Inc. (NFLX) and Hulu.Com have become severe threats to cable MSOs.

We believe that expanding the Wi-Fi network base will allow the cable MSO customers to view video content on the go, which in turn will arrest customer loss to telecom and other streaming companies.

Currently, both Comcast Corp and Shaw Communications carry a Zacks Rank #3 (Hold).

 
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