I’ve been reviewing comment feedback on various blogs and news sites regarding Sprint and Verizon’s femtocell offerings. I’ve noticed several clearly differentiated clusters amongst this feedback, and believe these needs to be used and acted on by operator’s marketing teams.

Categories of femtocell comments

Broadly, there are a few categories of commenters:

• Arm-Biters! Use the phrase “I would bite your arm off to get one of these”. Undoubtedly strong advocates and early adopters. Generally seem prepared to accept a non-perfect product, as long as it works reasonably well.
• FreeBees: Convinced that for the high monthly fees they already pay, they should have great coverage wherever they go, including indoors at home. Believe femtocells should be provided free of charge with free calls.
• Boosters: Think nothing of climbing up to the top of the roof and lashing 20 yards of coax cable connected to a repeater unit. They have a solution, but some of these repeaters are more expensive than femtocells and installation isn’t for the feint hearted. 
• NIMBYs: (Not In My Back Yard). Have argued strongly against having more cell towers in their neighbourhood, but still complain about poor coverage including indoors.  Can’t quite seem to connect these two issues.

Giving femtocells away free

North American cellphone coverage still seems to lag behind the rest of the world, with Verizon claiming the best overall coverage. In many cities around the world, we take for granted that we can use mobile phones almost anywhere - in offices, homes and on the street. This isn’t the case inside many suburban and rural homes in the US.

It has been rumoured that Sprint have been providing their Airave femtocell to some customers free of charge as a means of retaining their business. If this continues, the FreeBees will win out in the long term by getting their wish.

Establishing Value

As we’ve been arguing already, network operators need to establish additional value with their customers. The price of a femtocell is less than many mobile phones (e.g. an iPhone without subsidy), but could be used just as much between a household. Solving poor coverage is just one of the business cases for femtocells, and particularly applicable in North America.

Aspects such as crystal clear call quality, always reachable and longer battery life are perhaps expectations sold with basic service, however unrealistic that is.

Wireline broadband may about to differentiate premium service

We may also be seeing a similar story appear with wireline broadband in the near future, as operators start to differentiate with premium quality of broadband (suitable for VoIP and IPTV), at a higher price. TV broadcasters have already achieved this premium service distinction with HDTV, for which many customers seem more than happy to pay extra for.

Initially focus on the early adopters

As with any new product introduction, femtocell operators need to attract and sell to early adopters (Arm-Biters) who will then evangelise to a wider audience (known in Product Lifecycle terms as the Early Majority). Price should be less of an issue for this group, who will also be more tolerant of glitches and minor issues with its operation.

That’s not to say it could be seriously defective – frequent dropped calls or blocked services would backfire.

Once the product is more mature and any teething troubles are ironed out, then the price could be lowered and/or packaged differently to appeal to other market segments.

This perhaps explains why Verizon has set an initial sticker price of $250 for its launch, with no monthly charge for using it and no discount on calls. They've focussed specifically on the indoor coverage problem and are directly competing with Boosters who don't mind a bit of DIY. Verizon's Network Extender is cheaper than many RF repeaters and should be a lot simpler to install, even if it does tie you down to Verizon only.

Maybe it wants to set an expectation of additional value delivered, and a slight barrier for initial sales to self-select the arm-biters during the early launch period. It also gives it scope in the future to drop the price in line with lower costs or market expectations.

Comments (0)