Femtocell market to be won or lost based on price
The rollout of femtocells across the globe is gaining momentum but as with all new technologies, price will be the key to success.
UK research firm Informa Telecoms & Media says femtocell deployments have more than doubled in the last nine months as more and more tier one operators jump on the bandwagon.
According to Informa, some 13 operators currently have commercially launched femtocells, compared with only six commercial launches in November.
In the June quarter alone, Vodafone Spain, AT&T, Softbank Mobile and KDDI commercially deployed femtocell services.
Vodafone’s decision to rollout femtocells in a second European market illustrates the success of its heavily-promoted “Sure Signal” service in the UK.
AT&T became the first US operator to announce a nationwide 3G femtocell rollout and Softbank Mobile in Japan is the first operator to offer both free femtocells and free DSL backhaul.
“Femtocells are currently positioned for solving coverage problems but capacity is the next item to be addressed,” Dimitris Mavrakis, senior analyst at Informa, told telecomasia.net.
With six operators now offering femtocells in Asia, we finally have some insight into pricing models.
Early movers such as StarHub and NTT DoCoMo charge a monthly fee of $32.10 and $10 respectively for femtocells.
China Unicom and SingTel make customers pay for so-called Femtocell Access Points - 1,200 yuan ($177) and S$323 ($233) respectively - in addition to monthly charges.
Then we have the late-comers, namely KDDI and Softbank Mobile, which have turned the early mover business model on its head.
Softbank Mobile launched free femtocell service for up to four 3G users this month. Next month, KDDI will offer a free femtocell service for its 1xEV-DO users in coverage black-spots.
Free femtocells and improved 3G access in the home or office are very likely going to keep customers and loyal.
Informa estimates that 81% of mobile data originates from homes and offices where it could frequently be offloaded on to local broadband connections.
The problem is, it’s a scale game and it’s hard to see free femtocells being offered by a large number of operators in Asia any time soon until it becomes more affordable to do so.
On the other hand, charging outright high prices for femtocells just doesn’t make sense.