Business Model

Femtocells to fall below US$100 next year, claim insiders

Paul Rasmussen — Fri, 27 Nov 2009 12:54:03 -0500

Despite the lack of operator enthusiasm for commercial femtocell deployments, industry chatter in Taiwan claims that the price of the consumer devices will fall below US$100 per unit in the second half of 2010 compared to US$250 currently.

While consumer indifference dogs the uptake of femtocells, operators have been struggling to justify the business model based upon today's high-priced units. However, manufacturers in Taiwan, including Gemtek, Asusteck, Foxconn and Zyxel--which have each ventured into femtocell territory--are apparently much keener to push the technology now production costs have plummeted.

Also of note is the information that Huawei, which has won contracts to build cellular networks for Vodafone in countries like Ghana and the Czech Republic, has confirmed that it will start femtocell and 800MHz LTE research with the UK-based operator.

Vodafone, and more recently SFR, have been the first large European operators to commercially offer consumer femtocell products. However, the cost to the customer of around €200 is seen as a significant barrier to uptake.

While a halving of this price would ease this barrier, NEC, which is the end-to-end integrator for the SFR femtocell project, said that the technology must provide more than simply improving 3G voice coverage. "We will see femtocells changing the role of mobile phones in our lives further," said Richard Hanscott, VP network solutions, NEC Europe. "We're looking at new applications such as automatic synchronisation with the home PC network. This will enable photos taken on your handset to be automatically uploaded or music/video you've downloaded on your home PC to be sent to your handset when returning home. The possibilities that the femtocell network can bring are endless."

For more on this story:
Digitimes

Femtocells: T-Mobile and Orange remain sceptical

Paul Rasmussen — Fri, 26 Jun 2009 11:59:34 -0400

Regardless of the heady atmosphere at last week's Femtocell conference, T-Mobile and Orange have responded by say they won't be rushed into a deployment announcement by this newfound ‘enthusiasm'. The announcement by Vodafone that it would launch a commercial service starting this week was also slapped down by T-Mobile International saying that it wasn't worried about being first to market.

"We won't be pushed by that announcement," said Klaus-Jürgen Krath, T-Mobile's VP of radio networks engineering. "Let's see how they do in the market," he told Unstrung.

This reluctance by T-Mobile to enter the femtocell market is rather at odds with the company's investment in the femtocell vendor Ubiquisys and femto chip startup Percello, and the numerous trials and pilot deployments the operator has made with the technology. Of note has been T-Mobile recent extension of femtocell coverage into its retail outlets using Huawei and Ubiquisys access points to provide better 3G coverage for handset demo purposes.

However, T-Mobile remains cautious about the technical benefits for femtocell deployment, in particular the potential increase in backhaul traffic that can result from home usage, interference with the macro network and the quality of the broadband link. But Krath does admit that it may make sense to give the femtocells away for free to heavy data users, because the operational cost savings might make that scenario worthwhile.

Orange is still at the stage of remaining unconvinced the femtocell business model is viable. According to a company exec, it remains unclear what the customer should pay for a femtocell and how much Orange could charge for usage. "It will cost between €300 to €500 to install using a qualified installer, and add this to the cost of femto and the business case does not fly," he said. "If the consumer installs the device then there is the high possibility of a complaint if they happen to not see improved 3G coverage having incorrectly positioned the unit."

Orange maintain that its UMA service (a Wi-Fi/GSM combination) remains a very cost efficient and strategic option for the company until femtocells mature.

For more on the story:
Unstrung and GLG

Music downloads: up to 10 euros per track, claims study

Paul Rasmussen — Wed, 17 Dec 2008 13:14:09 -0500

While some mobile operators in Europe may charge as little as €0.75 to download a music track, new research indicates that data pricing varies so significantly between operators and countries that the consumer can end up paying up to €10 for each downloaded song.

A study, carried out on behalf of mBlox, claimed that the UK was the most expensive country to download a music track, with France not far behind, and Germany being the cheapest by some considerable margin. The loophole for operators, seemingly, is within the small print outlining ‘fair usage' within the T&Cs, effectively enabling operators to charge much higher rates.

According to Andrew Bud, chairman of mBlox, next year could be the pivotal year for rich mobile content. "But for this to happen, consumers need a transparent pricing mechanism to purchase rich content. Content providers need to be sure that their consumers are treated fairly," he said. "The current hope that flat-rate data will be the total solution is fundamentally flawed as market penetration is not high enough nor is it likely to be for some considerable time."

"To rebuild consumer trust and unlock the potential of the mobile content industry, we need to complement flat rate schemes with a 'sender-pays' business model, which ensures that the sender is able to purchase data at a wholesale cost and consequently offer fair and transparent pricing to consumers," concluded Bud.

For more:
- go to Cellular News

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Smart pipe or dumb pipe ... the operator's choice

Paul Rasmussen — Wed, 26 Nov 2008 12:20:53 -0500

Revenues from mobile content could amount to US$52 billion in 2013 if mobile operators pursue the right strategies. If they fail to implement new business models then they could end up as simple dumb pipes, says a new report from Juniper Research.

Mobile operators need to change their mobile content business models to emphasise shared value creation. In today's mobile content environment, mobile operators retain a significant percentage of the revenues generated by the content providers who use their networks. This business model means end-users pay a high price for accessing mobile content and, ultimately, lose interest. This acts as a disincentive to content providers who either attempt to go directly to the end-user or exit the sector entirely. This is an unsustainable scenario which could severely impact on the revenue streams operators hope to win from mobile content. However, the report emphasises that mobile operators must make the first move to break this impasse.

If mobile operators can change their ARPU-driven mindsets to focus on value creation and support for their partners, they can swiftly make the change, the report concludes.

For more on this story go to Mobile Europe

Related article:
Mobile content flops of 2008 revealed