Press release: Mobile operators must develop a robust business
case for femtocells
Mobile operators are considering widespread deployment of indoor base
stations - called femtocells - as early as 2008. A large-scale roll-out of
femtocells carries considerable risk and many early business cases are not
commercially viable, according to the report,
Femtocells in the Consumer Market:
business case and marketing plan, written by Unwired Insight.
"Femtocells are progressing rapidly from being an interesting emerging
technology to being ready for mobile operators to deploy," says report
co-author, Dr Alastair Brydon. "Engineering departments within mobile
operators have generally led the evaluation of femtocells but the next
critical step is to define a profitable business case, based on clearly
targeted and compelling customer propositions."
Key findings from the new report include:
- A number of service and customer scenarios in which operators
propose to use femtocells do not make sound commercial sense and may
cannibalise existing ARPU.
- Widespread use of femtocells solely to provide low-priced voice
telephony in the home, although stimulating fixed-mobile substitution,
could lead to disaster, as the revenue benefits are highly uncertain.
Mobile operators that focus on voice telephony must target key market
segments and resist very low pricing. For example, in a multi-person
household with poor existing cellular coverage, operators can recoup the
cost of femtocells within four months, provided a significant price
premium is maintained over fixed calls.
- A strategy underpinned by a range of multimedia service propositions
will result in a much stronger business case for femtocells, bringing
the potential to increase revenue and save substantial costs, and
offering operators the chance to recoup their investment within one to
eight months, depending upon the scenario modelled. Applications such as
mobile TV, video and audio services will significantly broaden the
consumer appeal of femtocells.
"Mobile TV could be a critical component of a successful femtocell
business case, providing substantial cost savings as well as revenue
enhancement," says co-author Dr Mark Heath. "Trials have shown heavy usage
of mobile TV at home, and mobile operators could save USD10 per household
per year by avoiding the need to build dense DVB-H networks in order to
provide mobile TV services indoors."
Femtocells in the Consumer Market:
business case and marketing plan shows mobile operators how to define
compelling consumer propositions (voice and non-voice) aimed at key market
segments to profitably derive revenue from femtocells. The report quantifies
the business case for deployment of femtocells for a range of customer types
and service mixes in order to pinpoint the most attractive opportunities.
The report also compares the business case for femtocells with a number of
other options, including network sharing, UMA services, home-zone tariffs
and traditional bundles, and defines exactly where, how and when femtocells
should be deployed to achieve the best return.