There has been quite a consumer craze for HDTV over the last few years, despite it being such a new technology. Sales of LCD and Plasma screens skyrocketed during 2008, with the Olympics and other headline sports events being used for justification. What would it take for femtocells to achieve the same consumer demand?

HD-Ready anticipates future services

What was perhaps most surprising has been the demand for “HD-ready” equipment – effectively consumers upgrading to buy displays for which they did not yet have any media to drive it to its full potential. The format war between HD-DVD and BluRay was still being worked out whilst HDTVs were flying off the shelves. Relatively few satellite or cable HDTV channels are available.

Two recent research studies have found that the demand from U.S. consumers for HDTVs hasn’t slackened despite the tough economy, but confusion remains about what you do with the TV once the set is purchased. As a result, many people buy a flat screen, take it home, plug it into their set-top box, and just think they have HD.

The key point for me was the latent demand for high quality, high performance equipment that existed.

Consumers expect to pay a premium for HDTV

Consumers expected to pay a premium for HDTV – more expensive receiving and display equipment, more expensive subscriptions (to pay for program creation), and higher prices for BluRay format DVDs. Some of these prices are easy to justify, especially in the early days of new technology. But are the technical costs of recording/televising a sports match or an episode of “Friends” really a substantial part of the total production costs? Surely it’s just a more expensive camera and recording/processing/transmission equipment.

My point here is that the perceived value to the end consumer of higher quality service justifies the premium price being paid in the consumers mind.

Do consumers expect to pay a premium for femtocells?

Compare this with some of the feedback about what we think consumers will say of femtocells:
•    “My cellphone provider should already provide a good signal in my house”
•    “I’m subsidising the network operator here – I should get a discount”
•    “I don’t want to let others use my femtocell – it would cost me.”

You don’t hear those comments made about HDTV do you – you’re more than happy to show off your new equipment to friends and neighbours and let them use it as much as they want.

John Stankey, chief executive of AT&T's operations division, speaking at a conference said "I don't know how you compete in the voice space with someone who has a pristine voice connection in the home through a femtocell."

The consumer benefit being promoted here isn’t “solving poor coverage” or other corrective action.

Instead it’s being promoted like “HDTV quality for mobile voice calls” – a clear consumer quality benefit.

Voice quality has been degrading in recent years

I’ve watched (or listened) to the quality of phone calls change over the last few decades.

There have been dramatic improvements:
•    Switching from analogue to digital wireline transmission
•    Replacing international satellite links with fibre optic cables
•    Upgrading from analogue to digital mobile phone systems

Which we’ve offset when trading convenience or cost for quality
•    Cordless phones
•    Mobile phones
•    VoIP, very low prices with sometimes variable quality

We’ve made choices to accept poor or reduced quality voice calls in favour of convenience (cordless/mobile) or price (VoIP).

Femtocells could be the HDTV of mobile phones

Femtocells offer the possibility to get back to the quality and clarity of telephone calls made in those early days of digital wireline telephony.

By promoting femtocell services as “the HDTV of mobile phones”, the industry would be promoting a more valuable benefit that simply cheaper calls (irrelevant for many on bundled minutes deals), and win the hearts and mind of consumers.

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