One of the lessons the femtocell industry might learn from their
UMA/WiFi colleagues will be about whether to insist customers take your
wireline broadband service with their femtocell. There's a tradeoff
here between providing a complete service, one customer care number for
all faults and capturing more revenue from the customer, versus putting
barriers in the way of early adopters.
[A reminder that UMA/WiFi uses a special UMA capable handset that
can connect to the mobile network either over the traditional cellular
radio or a WiFi hotspot in your home or other public area. Femtocells
differ by allowing any 3G phone to be used, subject to the policy of
the network operator and the femtocell owner].
Many mobile network operators (especially in Western Europe) have
quietly been buying up complementary networks capable of providing
wireline DSL broadband and voice telephony services. Vodafone can offer
these in Germany, Italy, Spain and Portugal amongst others; Telefonica
O2 in the UK; France Telecom/Orange in the UK. There are also many
encumbent telcos who always offered both fixed and wireless services,
such as KPN in the Netherlands, France Telecom and Deutche Telecom in
Germany.
One of the key commercial drivers for being able to offer the combined
triple-play or quad-play services was to be able to capture a greater
total share of telecoms spend within each family or business, and
reduce the chance of churn because customers become more "sticky"
because there is more work and cost involved in switching supplier.
Although the overall profit margin per month may be lower, the lifetime
value of each subscriber is higher. Dealer subsidies to attract new
customers are reduced because fewer customers switch supplier as
frequently.
We have seen both mobile and DSL broadband suppliers introduce longer
contracts, with high penalties for early termination. It's not unusual
for 18 month contracts to be signed for either of these services. So
whilst regulators have put in place procedures to easily change
supplier, including number portability and migration codes for
broadband services, the contractual penalties prevent rapid choice. Few
users track their contract expiry dates closely, especially for
broadband, and may not be aware of financial implications of switching.
I've documented my experience in trying to buy the Orange UMA service
in the UK (which they aren't currently actively marketing).
What can we learn from some current UMA operators' approach?
- Orange UK currently require customers to switch to their wired DSL broadband service and only permit UMA calls when using a WiFi access point on their network.
- T-Mobile US allow users to make WiFi calls from any WiFi connected hotspot, whether on their network or not.
Commercially, it depends on the current contractual situation with the customer's DSL provider:
Already a DSL broadband customer with same network |
Primary target for femtocell marketing campaign |
I can't switch DSL broadband supplier until my current contract runs out | If femtocell operator mandates this, then end of story - no deal |
Signup to switch on a pre-determined date in the future (i.e. when my contract does terminate) | I'll think about that, especially if it gives me a cooling off period to see how good the service is |
No requirement to switch now or in the future | Widest appeal. Commercially, I may end up paying a bit more overall. Might be some issues with technical support, but these give an opportunity to upsell fixed broadband later. |
We've seen a growing trend (certainly in the UK) for fixed network telcos to provide lock-in contracts for their wireline customers. There had always been a minimum of 12 months for standard fixed phone line rental, but this is being extended to cover broadband too - not always through completely transparent marketing methods. Sometimes opt-out bundled package deals are provided at similar prices, but with a contract period included. Other operators have longer contract periods of 18 months or more - effectively adopting the practices of the wireless industry.
Technically, reasons to restrict connection from other broadband networks include
- Better quality of service, because the traffic flows through the same operators network end-to-end and can be marked and prioritised as such. This is particularly true if voice calls can be prioritised by marking them for high priority (using DiffServ which some combined femtocell/DSL modems are already capable of doing).
- Control over the location of femtocells. If they are moved to other countries or switched between properties, then this can partly be detected and restricted by limiting connections only within the operators broadband network.
Several people ask if the quality of the broadband network can be required to meet a set standard and provide good enough QoS, latency etc. to ensure a good customer experience. The internet, even within a controlled broadband DSL service, is still really a best-effort network. Operators do use DiffServ, traffic shaping and other techniques to prioritise and manage the traffic flows between subscribers. This allows them to provide a "better effort" service for premium customers (e.g. businesses paying extra) and low bandwidth/low latency services such as VoIP.
Where end users are provided with a very low cost broadband service that is shared using a contention ratio between 20:1 or even 50:1, its not surprising that some traffic will be delayed or fail to get through. However, the actual bandwidth required for voice traffic is relatively minimal (the standard GSM codec runs at 13kbit/s before overheads).
In some ways, the variable quality of a radio connection between
handset and basestation (remember those frequent dropped calls and
poor reception in the early days of mobile?) are being swapped for an
excellent local radio connection and a variable quality broadband
backhaul. For data services, especially where data is offloaded at the
femtocell directly, then end users would notice little or no difference
from WiFi. For voice, the wide deployment of VoIP services including
Skype and others, has proven that these best effort IP services are
good enough.
Therefore, I would recommend to femtocell operators that they do not
restrict their femtocells to their own broadband networks at launch,
but provide some financial enticement to switch later - especially when
the current DSL broadband contract tie-in expires.
Comments
- People using their broadband provider's email address (abc.xyz
- Despite the rhetoric about "family plans" there will be plenty of instances of households with multiple operators (eg student houses, ones where someone has a work Blackberry from a different MNO). Will they be restricted to a max of 1 femto, based on the broadband?
- There might be a possibility of the femto MNO offering the customer a *2nd" broadband line during the transition - eg a cable modem customer could be given DSL as well, or (I think someone told me) 4-wire copper can support 2 DSL services
Dean
Good additional points.
I agree about the email address portability (or lack thereof). However, I know a lot of "casual" email users tend to go for webmail, such as Hotmail, Yahoo, Gmail etc. One reason is that its just too much hassle/complica ted to setup Outlook or similar to download email. Any web browser can be used from anywhere to access it. I'd be interested if there were any statistics about how many people are "locked in" to email from their broadband supplier. The other issue is sadly about spam - what's the lifetime of a personal email address these days anyway?
Re student/shared houses. I guess either these would agree to share a broadband line, or these days just have their own separate mobile broadband/mobil e phone subscriptions. A fair percentage of houses don't have a fixed phone line and wouldn't be addressable by the femto proposition anyway.
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