Tuesday, July 29, 2008

Will Consumers Pay for Coverage?

If there was ever a place in the world to explore consumer’s reaction to paying for coverage, it’s the US. While coverage undoubtedly improves year after year, the ads and tag lines from AT&T (more bars in more places) and Verizon (America’s most reliable network) tell the story that coverage is an important issue for American consumers.

So it is with great interest that we watch Sprint’s Airave femtocell service launch. Engadget reported today that consumers across the US can now order the Airave service.

The upfront price of the femtocell has increased to $99.99 from $49.99 in the initial service trial (Indianapolis and Denver). In addition, consumers must pay $4.99/month for the privilege of putting a CDMA (2G) base station in their homes to improve coverage. It costs $10/month for unlimited flat rate calling.

While some might question the logic of using a 2G/CDMA radio in the Airave (slower data service indoors, anyone?), it does ensure that the service will work with 100% of its deployed base of handsets, rather than the fraction of subscribers with 3G (EV-DO) phones.

Of course, T-Mobile’s HotSpot @Home service is the incumbent ‘home zone’ service offer in the US. There is no charge for using Wi-Fi to improve coverage. Subscribers can use existing Wi-Fi access points anywhere in the world to increase signal strength indoors. Consumers need a UMA-enabled phone, typically free or less than $100 with a two year service contract.

So it looks like the game is on for US consumers and mobile service providers. It will be interesting to see how this plays out.

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