Sunday, 11 October 2009

Femtocells: the conditions to be accepted by consumers

Three business models

Femtocells are starting to get out on the market now that most technical challenges have been met. However, the appeal for customers being so far limited to spending a fair amount to improve the coverage which they are already paying for. That is ridiculous. I can see three potential ways which would make sense, don’t forget it has to have an added value to be worth our attention.

1. The first case would be getting it for free with my iphone (or other useable Smartphone) contract or integrated into DSL modem at no extra cost. In such a case I don’t spend money and I get the good coverage which I expect to come with the expensive contract.

So far they have been proposed at a price of 100 to 200£/$/€ which is quite a lot. I will only be ready to put down that much of money down if I am going to get a return on that investment in some way. And coverage is not my priority as I as a consumer would choose the network which offers the best coverage in my area.

2. The first reason would be to reduce roaming charges as I do tend to travel in different EU countries for prolonged periods and I have broadband setup in those places which I already use for data but cannot do so for incoming calls or certain outgoing calls (I do use Skype for most of the outgoing calls anyway). Therefore carriers like Vodafone or orange which are present all over Europe would be capable of doing this. Other carriers would have to agree to a partnership with FON with its Femto Fonera concept (a bit more about my ideas about this further on). It is only through its potential to make savings on calls that I as a consumer would be interested in a femtocell. Personally I do not call that much anyway so having discounted or free calls from the femtocell would not be attractive for me but I believe that heavy users would be interested in a domestic situation.

3. The second case in which I would be interested in buying a Femtocell would be if I could make a certain amount of money out of it. I believe this is the most powerful way of getting Femtocells massively adopted especially in high usage areas. To put this into context, the main factor for carrier interest in Femtocells is to offload data traffic from their macro network. This is obviously due to the iPhone’s enormous data consumption and future increases. However if I have broadband and I’m at home I use wifi so my data usage is already being offloaded. Therefore it’s not only about offloading my data and increasing my coverage when I buy a carrier’s femtocell but more about increasing coverage for the other subscriber’s and offloading their data consumption from the macro network. The femtocell should therefore accept anyone from the carrier’s network; obviously all the data has to be routed through the carrier’s core network so that doesn’t pose any legal or security issues to the consumer. In exchange the carrier should give a portion of the revenues generated through that femtocell to the owner of that femtocell on a 50/50 basis. This is what would make it so attractive for people and businesses to buy them. Think about a restaurant or a coffee shop installing one, they would be able to advertise having an excellent 3G coverage (or even LTE in the future) which would please customers and improve the business’ profit and offload the data used by that large amount of subscribers in one place which are all using the network consequently as customers make a few calls, send a few texts, check their email or send a few photos on facebook in those specific places. This is therefore a win/win/win situation for the carrier, the femtocell owner and the consumer as there is less congestion, new incomes and increased bandwidth for everyone.

The Femto Fonera

Now let’s move on to the Femto Fonera and a few ideas to explore.

Let’s remember that Fon is a wifi sharing community where people share wifi access securely in exchange off which they can roam all the other hotspots for free and even make money of people who don’t share their access and therefore pay to access the internet through the foneras. Now wifi operates on an unlicensed frequency so anyone can install a access point and do whatever they want to do with it whereas femtocells have to operate on frequencies owned by wireless carriers who control what happens on those frequencies. They have to agree that you operate a femtocell which means they keep full control of what it can or can’t do. This means getting a Femtocell doing what consumers want to do with it will be much more challenging than it is for a wifi router.

Applying exactly the same model to a Femtocell Fonera would be the best, if you refer to the second and third model I proposed above and combine them you have it. Have a pricey Femto Fonera which will let you:

- use your mobile phone on a Femto Fonera abroad as if you were at home (ie no roaming charges) both calls and data, obviously there is a need for a way of letting the user know when he is on the Femtofonera’s coverage and when he isn’t anymore .

-make money off any phone using your FemtoFonera’s coverage to make calls, send texts or use data (ie anyone should be able to use the femtofonera without any manipulation )

-offload your calls through your home phone or a SIP server (for example integrated use of your SFR/NEUF or other Telcos’ unlimited calling plan to landlines when on YOUR OWN Femto Fonera(all of them if possible but I’m being “reasonable”))

-access to some local resources and an open applications platform, in the same way as it is currently possible with the Fonera 2.0 and 2.0N

The first telco’s which should be interested are the ones who propose the iPhone as they need to offload bandwidth. But I think there is two very big opportunities for FON if they can pull a few deals:

-partnering with MVNO’s by becoming a worldwide MSSE by partnering with MVNOs (such as blyk, giffgaff, virgin mobile, call in Europe, Simyo or any other MVNO) ( )

-partnering with amazon and enabling a free delivery off documents through the whispernet on the femtofoneras as amazon has decided to bring an international version of the kindle but sending any document on it costs a fortune (6x as much as in the US) and most of the documents downloaded would be from home anyway. It would benefit amazon, amazon customers, Fon and the fon community so everyone one would benefit from this deal, even the wireless carriers as this would lead to a reduced congestion of their network.

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