Femto sells, but who's buying‾ -- panel

17 Jul 2008

Before femtocells can live up to the hype, operators have to not only make sure customers get a good experience, but figure out just who those customers are, said a panel of experts Wednesday.

Femtocells have generated much excitement as a way for mobile operators to reduce churn, create new home networking services and offload 3G data traffic from their macro networks, among other things. ABI Research says sales of femtocells will take off in earnest sometime next year, some as standalone products, others integrated into home gateway products.

But speakers at a Broadband World Forum Asia panel session said that for all the promise of femtocells, uncertainty abounds in regards to a number of issues, such as a killer service model. For example, should femtocells be an FMC play or more data-centric‾

Dave Wisely, head of FMC research at BT, cited his company's experience with its first FMC service, BT Fusion, as an example of what operators can expect from a voice/SMS-based strategy.

"BT Fusion was based on Bluetooth and UMA technology, but it failed because we didn't make voice cheap enough," he said. "The problem is if you do make it cheap enough, your ARPUs go down considerably."

Wisely said a 3G data play for femtocells is attractive to operators, partly because customers "aren't going to install femtocells just to improve patchy voice coverage", and partly because of the offload factor.

"But you have to look at issues like if standard DSL backhaul is good enough," he said. "Some say yes, some say no."

Wisely said that the most appealing aspect of femtocells to mobile operators is customer ownership. "That's the key for me. Mobile operators want to be an ISP and they want to own that home networking customer. I want to be able to upsell them to IPTV, e-banking and presence-based services."

To do that, however, said Dr Peter Lovelock, director of TRPC, mobile operators have to know how to get to the home user in the first place. "I don't believe the mobile industry knows how to reach me," he said.

Dr Lovelock said a crucial problem facing femtocell proponents is that there's no clear idea on just who the target market will be.

"The basic problem I have [with femtocells] is, does anyone really know who wants femtocells in their homes‾" he said. "Who will you market this to‾ Gamers‾ Housewives‾ No one really knows."

The answer, Dr Lovelock added, is complicated by the fact that no one's really sure who's actually going to sell femtocells in the first place.

"Who should be selling them‾ Carriers‾ Third parties‾ Wal-Mart‾ Should customers buy femtocells at all or will carriers subsidize them‾" he said. "There are no answers for any of these questions yet."

Whatever the answers might be, said Gavin Johns, CEO of Epitiro, the fate of femtocells will hang largely on the customer experience.

Johns cautioned that this wasn't just about making femtocells plug-and-play, but ensuring that femtocells deliver the same quality of service that customers already expect from existing services.

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