If Cablevision, the fifth largest U.S. cable operator, is not currently in the market for licensed spectrum, it should be, experts say, because its choice of WiFi as its long-range wireless technology could leave it lagging rivals such as Comcast.

Bethpage, New York-based Cablevision recently announced that it completed the first phase of a $300 million tri-state Wi-Fi network on which it would offer free wireless service to its high-speed Internet subscribers. (see Cablevision Unwraps Free WiFi)

The choice of Wi-Fi was surprising since Comcast, Time Warner Cable, and Bright House have invested heavily in Clearwire, a reconstituted joint venture that offers WiMAX services on a planned nationwide network. (see Tech Consortium Bids $14.5B on WiMAX)

Wi-Fi may meet Cablevision’s immediate needs, which are primarily exploratory and complementary to its other services, one expert said.

“But as mobile communications emerge more fully as a key competitive differentiator Wi-Fi’s technical limitations will force Cablevision to invest in licensed spectrum whether for WiMAX, LTE,  or some other service,” said Tim Farrar, president of Telecom Media and Finance Associates.

Because it runs on free, unlicensed spectrum, Wi-Fi communications can be a free-for-all, which means there is a lot of competition for bandwidth. That can cause frequent interference and poor performance.

Because it is short range, Wi-Fi in the outdoors requires a lot of power, and it can be expensive to deploy. Its indoor penetration is not great, and security can be a problem. It also performs poorly when users are moving around.

WiMAX, a long-range technology, operates on licensed spectrum which means the airwaves are reserved for the owner so it does not have many of the technical drawbacks of Wi-Fi.

Cable operators are still in the process of figuring out how they are going to use wireless.   

Comcast, Time Warner Cable, and Bright House have made a number of joint wireless investments – none of which led anywhere. A wireless joint venture with Sprint died on the vine. The group also purchased spectrum a few years ago and has done nothing significant with it to date.

“I don’t think the cable companies know for sure what they want to do with wireless but they are certain they will be at a disadvantage without it, because their rivals the big phone companies have it,” Mr. Farrar said.

Mr. Farrar believes that Cablevision, which operates in the gold-plated, high-traffic northeast, will ultimately have to acquire licensed spectrum as wireless becomes more of a competitive differentiator.

In fact he thinks Cablevision will approach spectrum owner NextWave Wireless, if it hasn’t already, to purchase that company’s swath of 2.5 GHz spectrum which it bought at auction two years ago.

“Cablevision or a surrogate would do well to engineer a joint venture like Clearwire with companies like Leap Wireless to acquire spectrum to get fully up to speed on wireless communications,” Mr. Farrar said.