Gaining subscribers, reducing churn; the femtocell niche

Vodafone UK remains the pioneer of consumer femtocells, having first launched the technology around 12 months ago. While Europe's other major operators continue to mutter about them being unproven and too expensive, Vodafone UK took the brave decision to push ahead with femtocells and target consumers in areas with poor cellular coverage.

Having made the mistake of initially labelling the product as a 'Vodafone Access Gateway'--a more consumer unfriendly brand would have been hard to imagine, revising it to 'Sure Signal' was said to have provided consumers with a clue to its capabilities.

But key to the success of this marketing initiative, according to the company, was understanding where in the UK consumers experienced poor 3G coverage in their homes. Once these cellular blackspots had been identified, Vodafone then focused its advertising and marketing at households that could benefit from a Sure Signal femtocell.

This effort had two objectives. Lee McDougall, Vodafone's senior network marketing manager for Sure Signal, said: "This is all about customer retention and attracting new subscribers from our rivals."

While these are admirable objectives--which Vodafone claims to have met, the company admits that it has come at a heavy price.

When first launched, Vodafone's femtocell was priced at close to €200. To boost uptake, the company then decided to provide a significant subsidy to each unit and reintroduce the femtocell branded as Sure Signal with a price tag of €60 to existing contract customers.

While not providing shipment numbers--McDougall maintains that volumes have risen and are above target--the company accepts that femtocells remain a complex product for consumers to fully comprehend.

In an attempt to persuade homeowners of the benefits, Vodafone believes that having Sure Signal units in retail stores is a much better route for potential users to appreciate the functionality and requirements.

"Our biggest issue," claims McDougall, "is awareness and educating consumers to the capabilities of femtocells. Consumers understand issues with poor TV or radio reception, now it's up to us to raise the awareness that the same problems can occur with cellular coverage anywhere across the world."

Pioneering can be an expensive and troublesome venture, but one that Vodafone's Sure Signal femtocell might just win through if it can continue to capture the imagination of the consumer--and the company can sustain the heavyweight subsidy. -Paul