Multiple system operator (MSO) Cablevision has decided to build a massive $350 million Wi-Fi mesh, covering its customer base in the New York Metropolitan area, and offer the service free to its customer base of cable TV, business broadband, residential broadband and VoIP users.

Eventually it may even start to offer wireless telephony using the Wi-Fi mesh, the company said, although it's not clear how that might work. The network will leverage Cablevision's existing infrastructure in the region, a move that will obviously cut costs significantly in providing backhaul. That network includes its Optimum Lightpath business broadband offering as well as its residential network. The Wi-Fi mesh, as described, will support both business-related services such as Blackberry connectivity and consumer needs.

The mesh will, at least at first, dish up 1.5 Mb/s broadband and "ultimately it will be a mobile voice-capable network," said Cablevision Tom Rutledge, disclosing the plan during an analysts briefing on its most recent quarterly results. Although the service will be free, the strategy is that "creating this value proposition for customers will enhance our service and cement our relationship with customers for the long haul," said Rutledge. "It will allow us to offer our services beyond our network,"

It also, of course, puts Cablevision on a direct collision course with the nation's cellular carriers, primarily Verizon Wireless and AT&T although T-Mobile is finally getting into the 3G data game and, should it actually ever get off the ground, the "new" Clearwire mobile WiMAX scheme (TelecomWeb news break, May 6). But of course that's nothing new for Cablevision, which has been fighting Verizon on the ground tooth and nail for both business and residential customers, most recently launching a major effort to snag the most lucrative phone customers of all, business users (TelecomWeb news break, Feb. 22). It's also battling Verizon's FiOS, which now covers about 30 percent of Cablevision's service area.

Based on most of the results in Cablevision's most recent quarter its holding its own in the battle against FiOS, although the standout performer in the quarter was its growing business broadband customer base, followed by increased VoIP penetration, although admittedly those remain smaller parts of the company.

On the business broadband side Optimum Lightpath revenues grew 12.2 percent, to $59.5 million, as opposed to 10.1 percent growth for the company as a whole, to $1.7 billion in total sales, of which cable TV still accounts for the lion's share, or $1.2 billion. Almost incidentally, the MSO reported a loss of $31.6 million, or 11 cents per share. It seems $104.9 million in losses from financial derivative contracts offset all of its profits.

The growth in business broadband sales, Cablevision said, was primarily attributable to continued growth in Ethernet data services, partially offset by the effect of the transition from traditional data service. It said that the business broadband was still unprofitable but improving, with an operating loss of $1.4 million, a 73.9 percent improvement year over year. It credited the improvement "principally to the continued expansion of the more efficient, higher margin Ethernet business."

The company didn't give separate figures for its thrust into business VoIP - that is, after all, a brand new effort.

On the consumer VoIP side it laid claim to 1,685,000 subscribers, up 93,000 or 5.8 percent from December 2007 and 367,000 or 27.8 percent from March 2007. That means the company is now providing phone service to about 36 percent of the homes its lines pass, a penetration level that's got to be constantly worrying Verizon. It has a 50 percent penetration rate for high speed broadband to those homes.