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The potential of femtocells

In a recent article in Fierce Wireless Peter Jarich of Current Analysis explains why he still does not have a femtocell. Going through the different arguments, I am even more convinced that femtocells have a bright future.

Here is a short summary of the contrarian arguments.

  • Femtocell offers are not mature, they are limited to 2G, and are very scarce
  • Coverage and capacity are not good value propositions, as consumers are convinced they are already paying for it
  • Coverage is not a problem for most users, as densely populated areas have good coverage, and since coverage at home can be a prime buying criterion for selecting a mobile operator
  • Capacity is also not a problem for most users, since most of the mobile data traffic is generated by devices that support WiFi, and since many of the most popular mobile data applications do not require a lot of bandwidth
  • Cheap voice is not an inherent feature of femtocells, and in any case voice services are already relatively inexpensive, with many different formulas of unlimited calling
  • No investment in marketing, which leads to confusion in the market, and requires intentional action from the user to discover which offerings exist

I do not agree that coverage and capacity are not real problems. As for capacity, it is a fact that mobile metworks around the world experience a surge in mobile data traffic, and this trend is sustainable and is expected to continue. As for coverage, this is not an absolute thing. Even though the coverage is good enough for voice traffic, that consumes very little bandwidth, it may not be good enough for high bandwidth data services. Moreover, the higher frequency 3G and 4G spectrum has less capability to penetrate walls, therefore the problem of coverage is expected to be even more serious for the higher bandwidth 3G and 4G data services.

The femtocell market is in its infancy. Operators are experimenting, studying the potential and trying to define wining offerings. With time the technical problems will be solved, 3G and later 4G femtocells will become available, and operators will determine their marketing strategies. At that point the service will be extended to many more markets, and clear marketing messages will be heard. Operators that succeed to create profitable offerings that are beneficial to their users will see a steep takeup. I am confident such offerings can be created.

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