Thursday, April 22, 2010

Bundling and commoditizing hotspots

In his column Thursday, NYT columnist David Pogue expressed puzzlement at the sudden availability of free Wi-Fi from his local cable TV companies:

Starting now, any New York, New Jersey or Connecticut customer of Cablevision, Time Warner or Comcast can use any of those companies' hot spots.

In other words, I, a Cablevision customer, can now use all of Time Warner's and Comcast's hot spots in these three states.

Now, I think this development is fantastic. It hits me where I live. It's free. It's fast and reliable. I love it.

But I'll be frank: I can't understand why they're doing this.
David, I’ve loved your product reviews since the Macworld days. But as business strategies go, this is no mystery.

Wi-Fi hotspots are a commodity — something everyone wants, but nobody wants to pay for.

The phone and cellphone companies — AT&T, Verizon, T-Mobile — have been bundling hotspot access with their cellular or DSL accounts for years. For iPad and iPhone users, the hotspots are clearly more useful (in terms of bandwidth) than what they’re getting on the actual (congested) 3G networks.

Clearly cable has to respond to these efforts by telco rivals to create loyalty and switching costs. In a Geoff Moore sense, this is a clear neutralization expenditure — get rid of the rival’s advantage.

As a consumer, it’s a great deal when there are multiple equally plausible alternatives to choose from. By making their offerings more similar, the NYC cable companies are helping along the process of commoditization. More power to ’em.

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