Jarich: Why I don't have a femtocell

I spent part of last week in San Diego at Avren's Femtocell Americas conference. It wasn't difficult to convince me to hang out at the Hotel Del Coronado for a few days and--as anyone who follows me on Twitter (@pnjarich) already knows--the sessions and speakers provided lots of solid insights and a great recap of where the femtocell industry stands as it starts to put the wraps on another year. Likewise, as in years past, there was the obligatory contrarian presentation leaving everyone a little depressed and/or defensive.

Little did I know going into the conference that I'd be the one giving that presentation.

To be clear, the title of my presentation was "Why I Still Don't Have a Femtocell" and the point was simply to provide an anecdotal view into one user's reasons for not having a femtocell. If you're looking for a copy of the slides, you can find them at slideshare.net. It was not meant to be an indictment of the femtocell value proposition but after 30 minutes of explaining why I haven't pulled the trigger on a small base station, it's easy to understand how that message was lost on the audience.

Regardless, the main points on why today's femtocell value proposition is limited for many users (myself included) were easily digestible.

  • Nascent Offers: Announced on November 16th, the Femto Forum's market status report provides an overview of the industry's first commercial femtocell launches. Three of the eight are in the U.S.: AT&T Mobility, Sprint Nextel, and Verizon Wireless. None of these three, however, are mature. Sprint and Verizon Wireless are still limited to 2G (CDMA2000 1X) services. AT&T has only launched services in a handful of markets. Going forward, AT&T will, doubtless, "go national" with its services next year and Sprint as well as Verizon Wireless are planning on dual-mode (2G/3G) femto launches. Until then, the options aren't good for your average U.S. user.
  • Coverage: Most of these early femtocell launches have targeted coverage as the problem they're aiming to solve. This is understandable: coverage continues to be a problem for users around the globe and a key driver of service satisfaction. Coverage, however, isn't necessarily a critical issue for your average user. Why? The sprawling nature of the U.S. may lead to coverage gaps, but in densely populated areas (including most of the places where people live) major coverage problems have largely been solved. Likewise, if a user is free to pick their service provider from various options, it's logical that coverage at home will be a prime buying criterion.
  • Capacity: As with coverage, the argument for capacity driving femtocell deployments is easy to understand. A combination of new mobile broadband networks and increasingly advanced mobile devices has led to an unprecedented surge in mobile data traffic. If the trend continues, operators are looking at a future where they can no longer economically support this traffic growth. Femtocells, then, can offload some of this traffic, ensuring a solid user experience for users whether they're indoors (on the femto) or outdoors (where the macro network is suddenly less burdened). Unfortunately, this doesn't explain how capacity will drive femtocell purchase decisions. On the contrary, most of today's advanced devices are smartphones, many of which can enjoy a capacity boost thanks to embedded WiFi. At the same time, many of today's most popular mobile applications (Twitter, Facebook, Myspace) don't require tons of bandwidth. Going forward, the proliferation of streaming multimedia applications and the continued lack of WiFi in featurephones will be a problem for operators. Using this as a message to sell femtocells is a tough proposition...Continued

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