Battle Heats Up To Provide Wi-Fi Access To NYC Rail Commuters
September 02 2009 - 7:16PM
Dow Jones News
Cablevision Systems Corp. (CVC), Verizon Communications Inc.
(VZ), AT&T Corp. (T), Sprint Nextel Corp. (S) and more than a
dozen other firms have submitted competing proposals to provide
wireless broadband service to customers on New York City commuter
trains.
The proposals set the stage for a battle over a key prize in the
war for Internet subscribers in the New York metropolitan area.
They were submitted for rail lines serving about three-quarters of
a million people from some of the most affluent neighborhoods in
the nation who ride the commuter trains for an average 45 minutes
to an hour each day.
New York's Metropolitan Transportation Authority (MTA) said
Wednesday it received the proposals after it sent out requests
gauging interest in the project in July. The respondents seek to
provide the service on Metro North train lines to upstate New York
and Connecticut as well as the Long Island Railroad, the two
busiest commuter rail lines in the U.S.
Cablevision, whose footprint encompasses much of the attractive
tri-state market, launched a Wi-Fi network one year ago that's
already available at roughly 96% of commuter rail platforms and
station parking lots serving Long Island, Connecticut and
Westchester County. The company said it's proposing to shoulder all
the construction and operational cost of the undertaking for the
cash-strapped MTA, making the service available to its existing
broadband subscribers at no additional cost and other commuters on
a subscription basis.
AT&T expressed interest in the project, but noted that the
process was still early, according to a spokesman. The company has
talked with the MTA about its experience with Wi-Fi, including
offering access points for free to its smartphone users.
Verizon, Sprint and AT&T couldn't be reached for
comment.
MTA spokesman Aaron Donovan said this was the beginning of a
procurement effort that would likely end in an open bidding
process. The MTA recently awarded Transit Wireless LLC with a
contract to provide underground cellphone service in New York City
subway stations.
Kevin Curran, senior vice president of wireless product
development with Cablevision, said its proposal could provide the
MTA with new revenue opportunities at no cost, and it would give
the MTA control over part of the bandwidth of the network in order
to monitor trains, electronic ticketing and other services.
Curran said that about half of the Metro North and Long Island
Railroad riders are already Cablevision customers. "We've been in
this business now for a year, and the response from our customers
is overwhelming," said Curran. "They want broadband access on the
trains."
If Cablevision is successful in its bid to provide the service,
it could bolster its standing with customers in the tri-state area
as it loses subscribers to new competition, such as the Fios TV
service launched in Cablevision's territory and elsewhere by
Verizon. Phone companies that have entered the pay-TV and broadband
Internet service business have a leg up on their cable counterparts
in the wireless area, thanks to their existing wireless
networks.
Unlike cellular wireless networks, Wi-Fi has traditionally been
used to serve stationary users within a given coverage area, so
Cablevision would face additional costs in providing service to
passengers on moving trains. On the plus side, many devices are
made to be Wi-Fi-enabled, so they don't require any additional
accessories.
"It doesn't sound terribly expensive for Cablevision to build
it, and it makes sense for them given their coverage area and the
new competition they're facing," said UBS analyst John Hodulik.
Skeptics say Wi-Fi will soon be eclipsed by new, faster and more
mobile wireless networks using fourth-generation, or 4G, technology
such as WiMax or LTE. The nation's largest cable operator, Comcast
Corp. (CMCSA) offers WiMax service in Portland, Ore., Atlanta and
Bellingham, Wash., and it expects to expand the service to
Philadelphia and Chicago by the end of this year. Time Warner Cable
Inc. (TWC) expects to offer WiMax service in Dallas and three
cities in North Carolina later this year.
Neither Comcast or Time Warner Cable submitted proposals to the
MTA, since the commuter trains are not in their footprints.
- By Nat Worden, Dow Jones Newswires; 212-416-2472;
nat.worden@dowjones.com
(Roger Cheng and Tess Stynes contributed to this story)