This week, analyst Danny Briere with Telechoice wrote an interesting piece for Telephony Online. The article was titled a rather depressing “Carrier Femtocell Pricing Doomed?”
I don’t think so, and Mr. Briere offers some interesting thoughts on alternative methods of pricing femtocell services. He has two points which I’ll oversimplify here:
- Separate the ‘coverage’ aspect of a femtocell from the ‘service’
The issue Mr. Briere has with Sprint’s Airave offer is that the consumer is required to purchase both ‘coverage’ and ‘service’ with the femtocell. A consumer wanting improved coverage must spend $50 and pay a recurring fee of $15/month. The same applies to a subscriber just interested in the flat rate calling plan. There’s no ability for Sprint to segment the subscriber benefit.
He contrasts this with T-Mobile’s Wi-Fi-based service where consumers can get ‘coverage’ by simply getting a dual-mode phone, no additional fees apply. Then if a consumer wants the flat rate calling ‘service’, they can spend an extra $10/month.
- Don’t underestimate subscriber’s ability to pay for something they value (in this case, coverage).
I think the concept of offering the femtocell as a pure consumer product play is creative. If the consumer values coverage, they may be willing to pay to address this issue. The operator may choose to have the consumer pay full price for the femtocell, or elect to subsidize a portion of the femtocell for subscriber retention reasons. But for subscribers who are coverage challenged, this may work.
One could apply the handset subsidy approach. If you want to just by a handset, a consumer pays full price. But if you choose to sign up for a service plan and commitment, then the handset is deeply subsidized.
To be worked out is the secondary/after market usage of a femtocell. Will the consumer be able to use the femtocell with a new mobile provider? In the
The point is there are many ways to meet consumer need, and the femtocell market is just getting started.
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