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.

Sagem makes it 3

Sagem's latest dual-mode handset, my519X, is now on the market and available to subscribers of Orange's unik service. The new tri-band phone music phone has an MP3 player and is 108 x 48 x 11mm, weighing only 89g.

The my519x is Sagem's third dual-mode handset to be sold by Orange for customers of its UMA-based service. The company also offers the Sagem my419x and my429x, which was added just a few months ago. .

With the addition of this new phone, Orange continues to drive its goal of offering more than 20 dual-mode handsets by the end of 2008.

T-Mobile's Home Phone Service

The other night I stopped by my local T-Mobile store. My buddy Jessica the sales rep was there. This time she knew to stay out of the way of the camera.

Here's some video of the visit. Jessica said there had been pretty strong demand. Well, why not, $10/month for home phone service. It's quite a deal.

Wi-Fi Stays Strong

The EU recently finished a study of telecom in the EU27 countries. The full study is published here in PDF.

One interesting statistic is the penetration of Wi-Fi into households with internet access. Within the EU27, 46% of households with internet access have Wi-Fi. As one would expect, the number actually goes up to nearly half (48%) when looking at just the EU15.

Topping the list in terms of penetration is Spain (68%) and France (67%), with Luxembourg at the top with 75% of internet enabled households using Wi-Fi.

It’s no wonder that Berg Insight projected Wi-Fi in handsets to grow at a CAGR of 71% over the next four years. By 2012, Berg projects 400 million handsets with Wi-Fi. The primary drivers are high speed interent access in the home/office, and ‘connected home’ applications.

US Market Heats Up

If the rumors are true, things in the home zone market are about to get very interesting in the US.

Yesterday, there was a flurry of rumors that Sprint will launch their femtocell-based Airave service nationwide July 15^th. The service has been in limited commercial trial for more than 6 months in the US.

Market watchers (like me) like to compare the service offers. According to the rumors Sprint will offer the Airave femtocell to subscribers for an upfront fee of $99 and $15/month (or $30/month for families). In return consumers get unlimited nationwide calling when attached to the femtocell, and improved coverage.

T-Mobile’s Wi-Fi based offer, HotSpot @Home, lets consumers use Wi-Fi access points already in the home or get new ‘optimized’ Wi-Fi routers from T-Mobile, which are free with a two year contract. Consumers can use Wi-Fi to improve coverage for their existing mobile plan. Or for an additional $10/month ($20/mos for families), subscribers can an add unlimited nationwide calling option when attached to Wi-Fi.

Interestingly, in a video interview from the Avren femtocell conference, Lauren Town, head of marketing at Orange for Wi-Fi-based home service Unik, noted that the value proposition articulated for femtocell home zones during the conference was nearly identical to their existing service.

It’s not clear if Sprint’s rate will come down to $10/month to match the T-Mobile offer. One clear advantage is that Sprint’s femtocell is 1xRTT (or ‘2G’ in CDMA parlance), which means that it will work with the entire installed base of Sprint handsets. T-Mobile's advantage? The service works on Wi-Fi anywhere in the world (enterprise, outside US,...) rather than just one femtocell.

Like many new offers, Sprint service has faced some growing pains during the initial trial phase. Presumably these issues have been worked out.

If anything, the pressure is increasing for AT&T and Verizon. Neither company has a ‘home zone’ offer, which means neither company has the ability to create a location specific service offer like ‘unlimited flat rate calling from home’.

PS – I just noticed this. The address used to be http://airave.sprint.com. But that address now redirects to http://www.sprintenterprise.com/airave/ Hummm…

An unlicensed femtocell

The market is catching on to the benefits of home zone services, where consumers get mobile services that work better and cost less. For operators, the ability to offload the macro network and increase the performance of mobile services indoors, coupled with the ability to develop location specific home or enterprise services has driven increased interest in this market opportunity.

Typically we talk about the need for home zone services, irrespective of the underlying radio technology (Wi-Fi or femtocell). For consumer and service providers, the benefits are nearly identical.

But an interesting trend has emerged in the press. Recently there have been several references to the ‘unlicensed femtocell’, perhaps known by the more common name of Wi-Fi.

The comparison makes sense. Femtocells have a couple of generic properties. One is a low power radio designed for use in-building CPE. Second is the ability for these devices to be deployed as consumer without operator intervention. Third, they are ‘self organizing’, meaning they determine their environment and adjust the capabilities accordingly. Forth, the term femtocell is actually radio agnostic. ‘Femtocell’ is applied to CDMA, UMTS, EV-DO, GSM, LTE, even WiMAX. While the one thing these have in common is that the frequencies are licensed, why not add 802.11 b/g to the list?

Now before you think this is something I made up, there have been several references of late:

This article in DigiTimes (“Tecom Ships UMA Femtocells”) refers to ‘UMA femtocells’ being shipped to T-Mobile. Clearly not the classic definition, these were in fact Wi-Fi terminal adaptors.

This article in The Register (“Femto Forum Gets Big Ideas”) comments that “In the USA T-Mobile is already deploying 2G femtocells to provide coverage in customers’ homes.” True, but it is an 802.11 b/g femtocell.

This last one is perhaps the most interesting. Ozzie Diaz, Chief Technologies for HP's wireless business, comments on his blog (“Wireless Operators Getting the Runaround”) about the importance of local radios:

One operator who does seem to have a clue on making use of these non-cellular radios in handsets is T-Mobile USA in their Hotspot@Home with unlimited calling while at home connected over their WiFi access point connected back to the T-Mobile core network. In essence a “femtocell” without the pain of the frequency planning or spectrum management. But taking the same advantage of femtocells and using the customers Internet access link at home for “free” backhaul to the core network…FABULOUS model of eliminating a BIG CAPEX problem for themselves.

It just gets you thinking about what a femtocell really is, a tool for making mobile services work better and cost less.