Sony endorses femtocells as Forum makes the business case
Published: 16 April, 2009
READ MORE: Femtocells
The emerging femtocell category has received a welcome endorsement from the vitally important Japanese consumer electronics sector, whose weight is important to mainstream adoption of any equipment destined for the digital home.
Sony and Toshiba are the latest recruits to the Femto Forum, the industry body supporting the miniaturized plug-and-play base stations, along with Cable & Wireless and Qualcomm. The entry of the Japanese giants could signal future integration of femtocells into CE gear such as DVRs.
And the latest set of business cases from the Forum (commissioned from Signals Research) indicate that femtos could be heading down the carrier subsidy route at an early stage to encourage high value users to adopt them - the study argues that the cost savings to the operator of offloading a heavy user's data to a femto justify giving the device away for free. A free femto makes commercial sense if 1.4Gb of HSPA data or 1.3Gb of EV-DO Rev A data is offloaded - not to mention the softer benefits of higher user satisfaction from improved indoor performance.
Much of the focus of operators trialling femtocells in 2008-9 has been on getting the cost down, with Vodafone setting a sub-$100 target, and recent ratification of 3GPP femto standards throwing out hope of the market achieving those kind of economics. However, in parallel, there has been a move to create larger and more complex femtos for the enterprise or even outdoor use, which will carry higher price tags. Signals argues that increasing the wholesale cost of the product by 50% (from $200 to $300) actually only reduces the value proposition by 16.3%. It adds that, in Europe, equipping a household with a 2.5Mbps indoor service would cost €320 compared to €900 if enhancing the macro network.
"There is no single factor required for healthy financial returns. Cost savings, incremental revenue, and retention benefits enable femtocells to be deployed successfully with a wide variety of assumptions," said J Randolph Luening, VP of wireless economics at Signals Research. "Instead, the business case is highly dependent on the attributes of the targeted customer segment and the specific customer proposition put forth by the operator."
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