Femtocells, those mini-base stations that plug into a broadband router or a carrier’s metro Ethernet feed in order to bolster wireless capacity, are on the brink of getting large. In fact, 2010 could be the year that operators fully embrace “cell-splitting” as not just the go-to strategy for mobile broadband congestion, but a way to add more customer value, too.
There are about 16 service commitments for femtos in place around the world, including 13 confirmed commercial launches and several ongoing trials. Meanwhile, completed trials are now progressing into deployment plans for several mobile operators, many of them Tier 1s, says research firm Informa Telecoms & Media. The numbers point to a snowball effect: There were just eight femtocell service commitments and six commercial launches as of November 2009.
And no wonder: The mobile broadband spike being driven by smartphones and 3G-embedded netbooks has operators in a mad scramble to improve coverage and capacity to avoid congestion of the type that AT&T Inc. famously experiences due to the iPhone. The problem is that upgrades take money, and unfortunately, data revenues have not matched the data traffic increases. That means service providers are looking for cheaper alternatives to big network buildouts, and more revenue streams, and femtocells fit the bill.
The Operator Case for Femtos
Cisco Systems Inc. estimates mobile data to be growing at an annual rate of 108 percent; Informa estimates that 81 percent of this data originates from homes and offices where it could easily be offloaded onto local broadband connections. The small home-router-sized femtos do just that, plugging into a user’s home broadband network to take care of the backhaul.
There are other advantages besides congestion relief in going with femtos as opposed to, say, relying on a Wi-Fi hotspot network. When it comes to the domestic market, it turns out that consumers are ready and willing to sign on for a femtocell and its benefits. Parks Associates in a survey found that more than half of U.S. broadband households with mobile phones are interested in femtos, a device that a dealer or channel partner can sell for upfront revenue just as she would a handset.
Education is also still a hurdle: Less than 10 percent of consumers surveyed were familiar with femtocells. But – and it’s a big “but” – upon exposure to a description of the femtocell and its benefits, 56 percent of respondents found femtocells “appealing.” That’s important because a full 72 percent of those were very interested in at least one advanced femtocell service. Examples of such services include virtual home number, which rings every cell phone in the home, or family alerts, which warn when a subscriber has left or returned home. Furthermore, half of these respondents indicated a willingness to pay $4.99 per month for their single favorite service or $9.99 per month for a bundle of their favorite three services, illustrating a new revenue opportunity in pumping up ARPU and the ability to improve stickiness.
